Trading Update: Friday June 18, 2021
Emini pre-open market analysis
Emini daily chart
- Fell below Wednesday’s low, but reversed up and closed just above open.
- Yesterday is an Emini High 1 buy signal bar, but after 2 big bear days, and without a big bull body, it is a weak buy setup.
- However, it was a bad follow-through bar for bears looking for the start of a correction.
- There have been many selloffs over the past year. Most ended within a few days, and the bull trend resumed.
- Unless the bears get more bear bars closing near their lows, traders will expect another new high before there is a correction.
Emini 5-minute chart and what to expect today
- Emini is down 28 points in the overnight Globex session.
- It broke below yesterday’s low.
- This week is outside down from the all-time high on the weekly chart.
- Getting near the bottom of the 3-week trading range. That increases chance that bears will take some profits soon.
- If the selloff is going to be the start of a correction, the bears will need to show signs of strength.
- One sign would be getting the week to close below last week’s low, and on the low of the week.
- There is therefore an increased chance of a bear trend day today.
- The bulls always want the opposite. They will therefore look to buy a reversal up from below last week’s low, and the bottom of the 3-week trading range.
- They want the week to close in the middle third of the week’s range.
- Today will probably not be a big bull day since the bulls had 3 strong reversals up over the past few days, and the Emini is now breaking below all of those bottoms.
- When the market repeatedly tries to do something and fails, it often then tries to do the opposite. This increases the chance of lower prices over the next few days.
- Most days have at least one reversal, and that is likely today.
- Since the market is deciding if a reversal is starting on the daily and weekly charts, there is an increased chance of a trend day today in either direction.
- If there is a series of strong trend bars in either direction in the 1st hour, the odds of a strong trend day will go up.
- Today is Friday so weekly support and resistance can be important, especially in the final hour.
- There many magnets within reach today: last week’s high and low, this week’s open, this week’s high (which is the all-time high), the May 7 high, the open of the month, and the 4,200 Big Round Number.
Yesterday’s Emini setups
EURUSD Forex market trading strategies
EURUSD Forex daily chart
- Turning down from a lower high major trend reversal on the weekly chart. It is also the right shoulder of a head and shoulders top.
- Breakout below the May 5 low at the bottom of a 2-month trading range. But, the EURUSD is still in the middle of the 11-month range.
- Yesterday was the 2nd consecutive big bear day. It increased the chance of lower prices next week.
- A 3rd consecutive big bear day closing near its low would be unusual within a trading range. The bears are likely exhausted, and many will take some profits soon. Bull scalpers will also begin to buy today, looking for a brief bounce.
- Therefore, today will probably be something other than a 3rd big bear day. If there is an early selloff, there will probably be a reversal up, to around the middle of the day’s range.
- Yesterday’s close was far below the May 5 low at the bottom of the 2-month trading range. That increases the chance of lower prices over the next week.
- However, there is often a bounce back up to the breakout point. Therefore, the EURUSD might test the May 5 low within the next few days.
- The bulls want the bear breakout to fail. If they get a bull bar closing near its high today, many bears will exit above its high.
- Since a 2nd leg sideways to down is likely, even if today is a bull day, traders will sell a 1- to 3-day bounce.
- Bears want strong breakout below November low, which is bottom of 11-month trading range, and then a measured move down to the January 2017 low, which is the bottom of the 7-year trading range.
EURUSD Forex trading on 5-minute chart
- Trading range overnight, but fell below yesterday’s low in a strong series of bear bars.
- Starting to bounce over past 5 minutes. Bears might be taking some profits after 2-day sell climax.
- Bears hope this 30-minute selloff will be the start of another big bear day. It will more likely attract profit takers.
- 3rd consecutive big bear day unlikely since still in 11-month trading range. Therefore, today will either be small bear day, a trading range day, or a bull reversal day.
- If it is a bull day, it probably will not be a huge bull day.
- The most common thing after an extreme climax is a trading range. Day traders will probably buy reversals up from selloffs and sell reversals down from rallies, and take quick profits.
- If there is a series of strong trend bars in either direction, they will swing trade. Most likely, the bears will use selloffs to take some profits, so big bear day unlikely.
- After 2 huge bear days, big bull day is unlikely, but the profit taking (short covering) could be strong.
Summary of today’s S&P Emini futures price action and what to expect tomorrow
End of day summary
- The Emini gapped down and sold off in a bear channel, but formed many big overlapping bars. It was easier for bulls and bears to make money with limit orders, betting against breakouts. That made a reversal up likely.
- Reversal up from consecutive wedge bottoms and a breakout above an OO after a failed breakout below.
- Strong reversal up but not to a new high, and then entered trading range.
- Late bear breakout and the week closed near its low. Next week might gap down on weekly chart.
- If the bears keep getting bear bars on daily chart, traders will expect a correction. Once the Small Pullback Bull Trend on the weekly chart ends, the selloff will probably be 15 – 20%.
- Most reversal attempts are minor. Unless the bears get strong follow-through selling next week, this selloff will be minor as well.
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 Time
When I mention time, it is USA Pacific Time (the Emini day session opens at 6:30 am PT, and closes at 1:15 pm PT). You can read background information on the market reports on the Market Update page.