Emini and Forex Trading Update:
Monday June 29, 2020
I will update again at the end of the day.
Pre-Open market analysis
The Emini’s 3 month rally has been losing momentum for several weeks. Traders expect a 50% retracement but think the Emini might have to test the gap above the February 24 high first.
Last week was a bear bar on the weekly chart. It is a Low 2 sell signal bar for this week. The bears see the 3 month rally as a lower high double top with the February high.
But the bull trend has been very strong and the Emini has been sideways for a month. This is a weak sell setup. Consequently, even if the Emini falls below 2700 over the next few months, the bulls will buy the selloff. They expect a test of the June high after a surprisingly strong rally.
Tomorrow is the last day of the month. The bulls want a bull body on the monthly chart. However, the bears want June to close near its low. That would increase the chance of lower prices in July.
With the Emini sideways for 4 weeks and tomorrow being the end of the month, traders might wait for July to decide on the direction of the next several weeks. This increases the chance of the Emini staying around the open of the month through tomorrow’s close.
Low 2 top on the weekly chart
The bears want today to go below Friday’s low. That was the low of last week. If today fell below, it would trigger a weekly Low 2 top sell signal.
But the Emini has been in a trading range for 4 weeks. Most trading range breakout attempts fail. Consequently the bears need more to convince traders that they are in control. They need a close far below Friday’s low and follow-through selling for several days. Without that, the Emini will continue to be neutral
Overnight Emini Globex trading
The Emini is up 8 points in the Globex session. Friday was a Spike and Channel Bear Trend. That typically leads to a test of the start of the channel and then a trading range.
Friday’s bear channel began exactly at the open of the month, which is already an important target. The Emini has oscillated around it for 3 days. Coming into the day, traders expect at least a couple hours of trading range price action today, and it could last all day.
With the Emini is a trading range for a month, there is an increased chance of trading range trading on the 5 minute chart. Also, Thursday’s unemployment report is important. That is another reason why the Emini might stay sideways this week.
Finally, the Emini is near the bottom of the range. That increases the chance of a bounce early this week.
This week’s seasonally bullishness increases the chance of a bounce. This is true despite last week being a sell signal bar on the weekly chart. But a strong selloff far below last week’s low would shift the odds in favor of lower prices for several weeks.
EURUSD Forex market trading strategies
The EURUSD Forex market on the daily chart has been sideways for 4 weeks. But the trading range is in a bull trend and it is therefore a bull flag. That means there is a slightly higher chance of a bull breakout.
The EURUSD rallied for 2 days last week and then pulled back to test the bottom of the trading range. It is reversing up again today. If today closes near its high, it would further increase the chance of a break above the top of the range.
When a market is in a trading range, the probability of a bull or bear breakout is rarely more than 55%. The market would not be going sideways if one side had 60% chance of more of winning. However, if today closes near its high, the bulls will have a 55% chance of a breakout above the June 16/June 23 double top.
It is important to remember that there is no breakout until there is a breakout. Consequently, the bears still have a 45% chance that the 2 day rally will fail. If there EURUSD reversed down this week from below the double top, the odds will shift back to 50-50, or possibly even slightly in favor of the bears.
Overnight EURUSD Forex trading
The 5 minute chart of the EURUSD Forex market rallied from last week’s close overnight. Day traders have only been buying for 5 hours after a 28 pip pullback at the start of the European session. If there is another 25 – 30 pip selloff this morning, day traders will begin to sell for scalps as well as continue to buy.
The key today is whether the day will close near its high. The closer it closes to the high, the more traders will expect higher prices tomorrow. But if the bears get the day to close in the middle of the range, traders will look for a sideways day tomorrow.
Summary of today’s S&P Emini futures price action and what to expect tomorrow
End of day summary
The Emini sold off on the open to trade below last week’s low. That triggered the Low 2 top sell signal on the weekly chart. However, it then reversed up in a bull trend day.
On the 60 minute chart, there have now been 3 consecutive expanding triangles. Each one is smaller. Today’s was an oo (consecutive outside bars). The bears continue to fail. That increases the chance of higher prices for at least a couple more days.
Today was the 4th consecutive day that traded above and below the open of the month. Tomorrow is the final day of the month. Therefore, the open of the month will probably be a magnet tomorrow, especially in the final hour.
The bulls want a big bull body on the monthly chart. They will try to get tomorrow to close far above the open of the month. That would increase the chance of higher prices in July.
Not only do the bears want June to close below the open of the month, they want it to close on the month’s low. June would then be a reasonable sell signal bar on the monthly chart. It was also increase the chance of at least slightly lower prices in July.
Because today reversed up from the bottom of a 4 week trading range, traders expect higher prices for at least a day or two.
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.