Emini and Forex Trading Update:
Tuesday June 11, 2019
I will update again at the end of the day.
Pre-Open market analysis
The Emini reversed down yesterday from above the May 16 high and 2900. There is now a double top bear flag on the daily chart. Yesterday is the sell signal bar for today.
But after a 6 day rally, most bears will want a micro double top before selling. Furthermore, yesterday was a doji bar on the daily chart and therefore a weak sell signal bar. Consequently, if today is the start of a pullback, the selloff will probably just last a few days. A trading range is more likely than a bear trend.
When a market races up to resistance and then stops, it usually enters a tight trading range. It needs time to decide if it will break out or reverse. That is what is happening on the daily chart. The Emini will probably begin to pull back this week. It will likely be sideways into next week’s FOMC announcement.
Yesterday sold off in a bear channel on the 5 minute chart. Since 75% of bear channels have bull breakouts, yesterday is a bull flag. Today will probably break above the bear channel.
The bears will try to create a double top with yesterday’s high. That would create a micro double top on the daily chart. This is especially important since the daily chart is testing important resistance at the May 16 high.
Overnight Emini Globex trading
The Emini is up 17 points in the Globex session. It will therefore open far above the bear trend line on the 5 minute chart. In addition, it might gap up above yesterday’s high, like each of the past 4 days.
However, the daily chart is at resistance and it is overbought. In addition, there is a parabolic wedge bull channel on the 60 minute chart. There is therefore an increased chance of a reversal down today from around yesterday’s high. That would create a double top on the 5 minute chart, which would be a micro double top on the daily chart.
Can today rally far above the May 16 high today? Yes, but that is less likely than either a mostly sideways day or at least a small reversal down. But if there are several consecutive big bull trend bars, traders will conclude that today could be a strong bull trend day. They would then expect a test of the all-time high ahead of next week’s FOMC meeting.
Yesterday’s setups
Here are several reasonable stop entry setups from yesterday. 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 formed an inside day yesterday. It is therefore a buy signal bar for today. Because it had a bear body, it is a weak buy setup. There might be more sellers than buyers above its high.
Furthermore, the 3 week rally is a wedge bull channel. That is a buy climax pattern. In addition, it might be forming a double top with the April 12 high.
Traders can see that Thursday’s consecutive outside bar had a big tail on top. That increases the chance of a pullback before rallying further. The low the outside bar is a higher low and therefore a magnet below. Also, a test of that low would be around a 50% pullback and a test of the 20 day EMA.
Most importantly, the chart has been in a bear channel for a year. Every rally and selloff reversed after a few weeks. There are probably enough traders expecting a continuation of this tendency to lead to a pullback over the next week.
This is especially true since all financial markets will be prone to getting neutral ahead of next week’s FOMC announcement.
Overnight EURUSD Forex trading
The EURUSD 5 minute chart has been in a 30 pip range overnight. Since yesterday is a weak buy signal bar on the daily chart, there will probably be more sellers than buyers above yesterday’s high.
This is especially true in light of all of the issues that I mentioned above. Consequently, day traders will look to sell rallies to around yesterday’s high.
Where will they buy? Many will buy around yesterday’s low, but Friday’s higher low on the 240 minute chart is more important support at around 1.1250.
So far, traders have been looking for scalps on reversals near the top and bottom of the overnight range. However, the rally on the 240 minute chart over the past 3 days has had 3 legs up. It is therefore a wedge and it is nested within a bigger wedge on the daily chart. Since a wedge is a buy climax, traders expect at least a couple legs down over the next few days. Day traders will be more willing to sell than buy today, unless the bulls get a surprising big bull breakout. But that is unlikely.
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
Today reversed down from above yesterday’s high and then broke below its low. Today is now a sell signal bar for a double top with the May 16 high. But after a 6 day rally, this is a minor sell signal. The bulls will buy the 1st 1 – 3 day selloff.
By trading back below Friday’s high, the Emini closed the gap up on the weekly and daily charts. While not particularly bearish, this erases a sign of a strong rally.
I have been writing for several days that the Emini would stall around the May 16 high and probably pull back for 1 – 3 days. Nothing has changed. Most financial markets might become quiet 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.
