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
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.
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
- 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
Here are several reasonable stop entry setups for today. 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.
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.
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.
Trading Room
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.
