Emini and Forex Trading Update:
Thursday June 4, 2020
I will update again at the end of the day.
Pre-Open market analysis
The Emini gapped up yesterday and broke above the 3,100 Big Round Number. Late in the day, it broke above the March 3 high. However, it sold off into the close. That was the start of the March crash and it is therefore an important target. Many bulls will take profits there and the bears will begin to sell for a trade down.
The Emini might trade around it for several days as traders decide if the rally will continue up to a new high or begin a 15% correction this summer. If the bulls get consecutive closes above that high, the Emini will probably make a new high this summer. Without that, the rally should exhaust itself and traders will expect the Emini to retrace about half of the 3 month rally.
Overnight Emini Globex trading
The Emini is down 16 points in the Globex session. It may open around yesterday’s low. That is interesting because yesterday was a big bull day on the daily chart and it came late in a bull trend. If the next day opens near the low of that day and sells off, it often leads to a reversal down. Consequently, if today opens near yesterday’s low, there is an increased chance that today will be a bear trend day closing near its low.
Can today be another big bull trend day? Probably not. This is the price where the bears have wanted to sell since the reversal up from the March low. The bulls will probably be unable to break strongly above it.
If they do, it will likely take several days to use up all of the supply here. Therefore, day traders will expect to sell rallies above the March 3 high. But they know that the Emini will should go sideways here for a few days. They will therefore look to buy selloffs. Finally, they know there is an increased chance of a bear trend day and the start of a reversal down.
EURUSD Forex market trading strategies
The EURUSD Forex market on the daily chart has rallied strongly and it is near a measured move target. Yesterday’s body was bigger. When a bar is big and it comes late in a bull trend, it is usually a sign of exhaustion. There is often one more brief leg up for a couple bars, but there is then typically a pullback.
The 1st target is the bottom of that buy climax bar. At a minimum, that is around the March 27 high. More likely, the pullback will test the May 1 high. Another target is the neckline of the head and shoulders bottom. That is the May high, just above 1.10.
The bulls want this rally to go straight up to the March high without more than a 1 – 3 bar pullback. That would be unusual, especially after a buy climax day like yesterday. Traders should expect profit taking within the next days.
If today closes near the open, today will make other bulls take some profits. Also, bears will begin to scale into shorts.
But if today closes near its high, the EURUSD should reach the 1.1309 measured move target within a few days before pulling back. In either case, traders should expect a 100 – 200 pip pullback to begin within a week.
Overnight EURUSD Forex trading
The 5 minute chart of the EURUSD Forex market sold off overnight and then reversed up to a new high, Over the past 30 minutes, it has pulled back to the open.
Today so far is a doji bar on the daily chart. Since yesterday was a big bar in a buy climax, it will attract profit takers. The selloff on today’s open and again on the rally to the new high are examples.
Will there be enough sellers today near the high of the day to cause the day to close near the open? That will attract other profit takers tomorrow.
Or, will the bulls buy every selloff and get the day to close near its high? The big reversals today are a sign that the bull trend on the daily chart is losing momentum. Day traders will be more willing to sell rallies. They will continue to buy selloffs.
Strong bull trends usually do not immediately reverse into bear trends. Therefore today will probably be sideways.
Summary of today’s S&P Emini futures price action and what to expect tomorrow
End of day summary
The Emini gapped down and rallied up to the March 3 high. Like yesterday, it reversed back down. It sold off to below yesterday’s low. There was some profit-taking at the end of the day and the day closed just above the open. Today was a doji day.
The Emini might spend several days around the March 3 high before either reversing down or breaking up. The odds favor a 15% pullback before a new all-time high.
See the weekly update for a discussion of the price action on the weekly chart and for what to expect going into next week.
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 Market Update page.