Emini and Forex Trading Update:
Monday June 10, 2019
I will update again at the end of the day.
Pre-Open market analysis
Last week formed an exceptionally big outside up bar on the weekly chart. It is a buy signal bar for this week. Because it is a big bar, the stop for the bulls is far below. Many bulls want smaller risk and will wait to buy a pullback.
Also, the daily chart has been in a trading range for 5 months. The Emini is now back to the middle of the range. In a trading range, traders prefer to buy low. Consequently, there might be a lack of buyers around last week’s high.
The bears want a double top with the May 16 high. But the 5 day rally is so strong that the bears will need at least a micro double top. The bulls will buy the 1st pullback. This means that there will probably be buyers below Friday’s low.
Can today be another big bull trend day? The rally is more likely to stall around the May 16 high and the 2900 Big Round Number. Also, Thursday’s and Friday’s buying was extreme. As a result, there will probably be some profit taking today or within the next few days. That increases the chance of trading range price action today and tomorrow.
Overnight Emini Globex trading
The Emini is up 14 points in the Globex session. It might therefore gap up on the daily and weekly charts today. However, a small gap typically closes in the 1st hour.
This strong rally is testing the May 16 major lower high. The Emini should reach that target and the 2900 Big Round Number early this week.
However, if a strong rally tests a prior high, it can still lead to a deep pullback or a reversal. Just look at the week chart for an example. The 2019 rally was extremely strong, yet reversed down from a perfect double top with the September high.
As strong as last week’s rally was, it is still a test of resistance. Consequently, some hesitation is likely for a few day. It could last up to next week’s FOMC announcement. As a result, there is an increased chance of a trading range over the next week.
That increases the probability of intraday trading range price action. Therefore, day traders will look for 2 – 3 hour trends to reverse and lead to 2 – 3 hour opposite swings. This is true even if a trend is strong.
Can today be a strong bull or bear trend day? Yes, but the odds of trading range price action this week are higher.
Friday’s setups
Here are several reasonable stop entry setups from Friday. I show each buy entry with a green rectangle and each sell entry with a red rectangle. I rarely also show limit order entries and entries on the close of bars. Buyers of the Brooks Trading Course have access to a much more detailed explanation of the swing trades for each day.
My goal with these charts is to present an Always In perspective. If a trader was trying to be Always In or nearly Always In a position all day, and he was not currently in the market, these entries would be logical times for him to enter.
EURUSD Forex market trading strategies
The EURUSD daily Forex chart triggered a buy signal on Friday by going above Thursday’s high. Thursday was the 2nd consecutive outside bar and therefore an oo (outside-outside) buy setup.
This is a high probability pattern and traders should expect a test of the March 20 high over the next 2 weeks. But the tails on Thursday’s and Friday’s high indicate hesitation. Therefore, a 1 – 5 day pullback is likely this week.
The bears want the buy setup and breakout above the April 12 high to fail. They see the 3 week rally as a wedge buy climax and the 2nd leg up in a double top with the April 12 high. They therefore want a reversal down and a new low, not just a pullback from a rally. The bears know that every breakout over the past year has failed. Each led to a new low within 2 – 3 weeks in the yearlong bear channel.
However, because of the oo buy signal, the bears will probably need at least a small double top if they are to succeed. At the moment, a 1 – 5 day pullback is more likely than a trend reversal back down.
Overnight EURUSD Forex trading
The EURUSD 5 minute Forex chart so far has failed to break above Friday’s high. The bulls want immediate follow-through buying. That would increase the chance of a test of the March 20 and January 10 highs.
However, traders know that every 2 – 3 week rally over the past year failed. This will make some bulls take profits and bears sell this rally. Therefore, there is an increased chance that today will be a bear day on the daily chart.
The 5 minute chart has sold off 35 pips from the overnight high. But the bars have been small and have prominent tails. Also, there are no consecutive big bear bars closing on their lows. Traders therefore see the selloff as weak. A weak selloff or rally is usually part of a trading range. Consequently, day traders will look to buy reversals up, sell rallies, and take quick profits.
The bears will try to get today to close on its low. It would therefore be a stronger sell signal bar on the daily chart.
If the bulls can get today to close near its high, it will be a High 1 buy signal bar for tomorrow. Since higher prices over the next 2 weeks are probable, there is a slightly higher chance of today closing near its high. But the lack of energy so far today make a trading range likely.
Summary of today’s S&P Emini futures price action and what to expect tomorrow
Here are several reasonable stop entry setups for today. I show each buy entry with a green rectangle and each sell entry with a red rectangle. I rarely also show limit order entries and entries on the close of bars. Buyers of the Brooks Trading Course have access to a much more detailed explanation of the swing trades for each day.
My goal with these charts is to present an Always In perspective. If a trader was trying to be Always In or nearly Always In a position all day, and he was not currently in the market, these entries would be logical times for him to enter.
End of day summary
The Emini rallied on the open but reversed down from above the May 16 high and the 2900 Big Round Number. Today is a sell signal bar on the daily chart for a double top with that high. Traders expect a pullback and then a trading range ahead of next week’s FOMC announcement.
See the weekly update for a discussion of the price action on the weekly chart and for what to expect going into next week.
Trading Room
Traders can see the end of the day bar-by-bar price action report by signing up for free at BrooksPriceAction.com. I talk about the detailed S&P Emini futures price action real-time throughout the day in the BrooksPriceAction.com trading room. We offer a 2 day free trial.
Charts use Pacific Standard Time
When I mention time, it is USA Pacific Standard Time (the Emini day session opens at 6:30 am PST, and closes at 1:15 pm PST). You can read background information on the intraday market reports on the Intraday Market Update page.
