Trading Update: Monday June 5, 2023
S&P Emini pre-open market analysis
Emini daily chart
- The Emini closed above the February high last Friday. This is a strong enough upside breakout that it will probably get a second leg up and a test of 4,400.
- The Emini bulls want rally to test the August high, which is around 100 points higher.
- The bears want the upside breakout last Friday to fail and for the market to reverse today or tomorrow. While this is possible, the Bulls will probably get a small 2nd leg up. This means the first reversal down will probably fail.
- Traders will pay close attention to the kind of follow-through the bulls will get today.
- The bears will try and get back follow-through today and damage the bull argument that last week was the start of a successful upside breakout.
- Overall, traders should assume that the bulls will become disappointed in the next couple of days and for the market to make traders question if last week’s breakout will succeed or fail.
Emini 5-minute chart and what to expect today
- Emini is up 3 points in the overnight Globex session.
- The Globex market has gone sideways in a tight trading range for most of the overnight session.
- Traders should expect the open to have a lot of trading range price action and for the market to go sideways.
- Traders should consider not trading the first 6-12 bars unless they are comfortable with limit order trading and making fast decisions.
- Traders should also assume that there is a 50% chance that the initial breakout on the open will fail and reverse directions.
- By waiting for 6-12 bars, a trader gains certainty on the day and increases their odds of possibly catching the high or low of the day. There is a 50% chance that bar 6 is either the high or the low of the day.
- Traders should focus on catching the opening swing that often forms before the end of the second hour.
- It is common for the opening swing to form after forming a double top, double bottom, or wedge top/bottom. This often provides a reasonable stop-entry trade for traders trying to catch the opening swing.
- The opening swing can provide a very good risk reward and decent probability, so traders should focus on trying to catch it.
- Lastly, traders should be ready for anything today. The bulls want follow-through buying today, and the bears want to halt the follow-through.
Emini intraday market update
- The Emini opened with three consecutive bull bars testing 4,300 and sold off to a new low of the day.
- The market is forming a triangle over the first 20 bars of the day. This is a breakout mode pattern, meaning traders should assume that the probability is close to 50% for both the bulls and the bears.
- The bears did a good job going below last Friday’s bar 78, the last major higher low. The bears can now argue that the market is no longer in a bull trend and is now in a trading range.
- There is a 90% chance that the market will go below the bar 10 low or 7 high. This is because, by bar 18, the market has typically seen either the high or the low of the day, but not both.
- If traders want a higher probability of catching a trend, they need to wait for a clear breakout, with follow-through, breaking out beyond support or resistance.
- Because the higher time frames are bullish, the bears probably need to create more selling pressure to get a bear trend today. This means if today is going to be a trend, it will probably be a bull trend.
- Even if the bulls get a breakout, it will probably be more of a trending trading range day than a strong bull trend.
- Overall, traders should assume that today will have a lot of trading range price action until proven otherwise.
Friday’s Emini setups
Al created the SP500 Emini charts.
EURUSD Forex market trading strategies
EURUSD Forex daily chart
- The EURUSD has been in a tight bear channel below the moving average (blue line) since early May.
- The bulls are developing decent buying pressure over the past couple of trading days, which increases the odds that the market will need to reach the moving average.
- The market came close to the moving average on Friday. However, the test came up short, and the market reversed before reaching it.
- The rally on Friday was likely not enough to satisfy a test of the moving average, which increases the probability of buyers not far below.
- The bears see last Friday as a Low 1 short. They want strong follow-through selling today, which would trap and bull buying the Low 1, expecting it to fail.
- More likely, the market will go sideways and reach the moving average over the next few days.
Summary of today’s S&P Emini price action
Al created the SP500 Emini charts.
End of day video review
Here is YouTube link if your browser blocks video popup:
See the weekly update for a discussion of the price action on the weekly chart and for what to expect going into next week.
Charts use Pacific Time
When times are mentioned, it is USA Pacific Time. The Emini day session charts begin at 6:30 am PT and end at 1:15 pm PT which is 15 minutes after the NYSE closes. You can read background information on the market reports on the Market Update page.