Emini bears want breakout below 8-bar tight trading range

Trading Update: Thursday June 9, 2022

Emini pre-open market analysis

Emini daily chart

• The bulls have had several strong trend bars closing near their highs. However, every bull trend bar in the current 8-bar tight trading range has been followed by a bear bar. This is a reminder of all the trading range price action.
• The bulls need to get an upside breakout soon, or the bears may get a bear breakout due to bulls giving up.
• Bulls hope that the current 8-bar tight trading range is part of a bull flag that will lead to a second leg up and test of the April 18 low; however, every bar that gets added to this tight trading range lowers the probability for the bulls.
• The bears hope that the rally up to May 27 will lead to a second leg trap and be followed by a test of the May 25 low.
• The bulls will try hard to prevent the May 17 breakout point from closing over the next few days.
• The bulls need to get an upside breakout of the tight trading range soon; otherwise, more and more bulls may give up, and the bears will get a successful bear breakout and test the May 25 low.
• Even if the bears reach the May 25 low, the odds still favor a test of the April 18 low at some point over the next couple of months.

Emini 5-minute chart and what to expect today

• Emini is down 25 points in the overnight Globex session.
• At the moment, the day session will have a gap down that will probably get closed early on the open.
• Traders should expect a trading range open and a limit order market.
• If a trader has trouble trading the open, they should consider waiting for 6-12 bars before trading since most opens have multiple reversals before a successful move.
• Traders can consider waiting for a credible stop entry or a strong breakout with follow-through.
• If the day is a trading range day, traders should try to identify the top and bottom of the range and avoid doing anything in the middle.
• Lastly, traders should remember that there is a 50% chance that the initial move up or down will lead to a major reversal.

Yesterday’s Emini setups

Al created the SP500 Emini charts.

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. Buyers of both the Brooks Trading Course and Encyclopedia of Chart Patterns have access to a much more detailed explanation of the swing trades for each day (see Online Course/BTC Daily Setups).

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. These therefore are swing entries.

It is important to understand that most swing setups do not lead to swing trades. As soon as traders are disappointed, many exit. Those who exit prefer to get out with a small profit (scalp), but often have to exit with a small loss.

If the risk is too big for your account, you should wait for trades with less risk or trade an alternative market like the Micro Emini.

EURUSD Forex market trading strategies

EURUSD Forex daily chart

• The bulls are trying to get consecutive trend bars and trend resumption up and a test of the April 18 high.
• The bulls are hopeful that today will be a bull trend bar closing on its high, which would increase the buying pressure of the bulls.
• So far, the bulls have done an excellent job keeping the measuring gap open from the May 5 high to the May 25 low. This increases the odds that the market may get a measured move from the June 13 low to the May 5 high.
• The bears hope any upside breakout of the current tight trading range will lead to a wedge top and a couple of legs back down. Those bears ultimately hope that the market will form a double top with the April 24 high and test back down to the June 13 low, but that is unlikely.
• The April 24 high is a major lower high, and the bulls need to get above it. That would increase the odds of the market being in a bull trend or a trading range. Ultimately the bulls probably need to get above the March 31 high.
• Overall, the bulls want consecutive bull trend bars and a successful upside breakout, and the bears want to prevent the bulls from getting a decent trend bar today. The bears will try to avoid a close above the 12-bar tight trading range.

Summary of today’s S&P Emini futures price action and what to expect tomorrow

Al created the SP500 Emini charts.

End of day summary

• Today had a trading range open that continued as a trading range up until the final hour of the day when the bears got a breakout and strong sell the close market.
• The day opened with a big bar 1 and big bar 2. Considerable risk on a low probability trade is terrible for stop entries. This means selling bar 1 and buying below bar 2 are good trades. However, they are challenging to manage, so most traders should not use wide stops with limit orders.
• The bulls tried to break to the upside around 7:00 PT; however, the bulls failed, and the bears formed a 2nd leg trap. Usually, when a 2nd leg trap happens, the market will test the bottom of the second leg (bar 4) and go sideways. This meant the odds favored a trading range, not a bear trend day.
• The market continued in a trading range for the next several hours until the bears got the bear breakout below the Trading range.
• It is essential in a trading range to find the top and bottom of the range and avoid buying in the upper one third or selling in the lower one third (bad math).
• It is easy to miss the sell-off at the end of the day. It’s the final hour of the day, and the market has been in a trading range for the entire day. It is hard to shift gears and switch to trend trading.
• When there is a clear breakout below the range with follow-through (orange box late in the day on the chart), it is essential to get short with even a small position.
• Note: There is a CPI report at 5:30 AM PT tomorrow, June 10. The report can lead to a big move, so it is essential to be aware and trade small if trading the Globex session during that time.

See the weekly update for a discussion of the price action on the weekly chart and for what to expect going into next week.

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Trading Room

Traders can see the end of the day bar-by-bar price action report by signing up for free at BrooksPriceAction.com. Al talks about the detailed S&P Emini futures price action real-time throughout the day in the BrooksPriceAction.com on trading room days. We offer a 2 day free trial.

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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.

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