Emini Review - Monday, June 23, 2025 - Joseph Imbornone

Summary

In this trading review, the speaker analyzes the E-mini 5-minute chart from Monday, June 23, 2025, breaking down market behavior and price action. They discuss key concepts such as breakouts, second legs, and trend patterns, emphasizing the importance of identifying market structure and making decisions based on bar closings. The speaker also highlights the fractal nature of price action, explaining how it applies across various timeframes. Ultimately, the review reveals a day marked by two-sided trading with both bullish and bearish swings, with the bulls showing control overall despite some volatility and market corrections.

Takeaways

• 😀 Price action analysis begins with understanding the market structure, focusing on the previous day's price action to predict the next day's movements.
• 😀 A small gap in the market suggests a trading range, where price action tends to range sideways before any breakout.
• 😀 The trader identifies key market patterns such as spike and channel formations and argues that they evolve into trading ranges.
• 😀 Breakouts typically lead to a second leg of price movement 95% of the time, making breakouts and second legs a core principle of the trader's strategy.
• 😀 A breakout failure or a lack of continuation (second leg) can trap traders and lead to reversals, especially when there's no clear trend continuation.
• 😀 The trader uses volatility expansion and contraction as indicators of whether the market is trending or ranging, marking moments of high or low momentum.
• 😀 When trading breakouts, it's important to focus on the behavior of bars in relation to the moving average. Strong breakouts often happen far above or below the moving average.
• 😀 Traders should only take long positions if there's a clear breakout to the upside and avoid short trades when there's no bearish breakout structure in place.
• 😀 The use of specific price action patterns, such as wedges and channels, can offer clues to when to expect a reversal or continuation.
• 😀 The trader emphasizes the importance of not trying to predict the market but rather responding to price movements and patterns in real time.

Q & A

What was the main focus of the analysis in this review?

The main focus of the analysis was on the E-mini 5-minute chart from Monday, June 23rd, 2025. The reviewer discussed price action, breakout patterns, and potential market moves, with particular attention on identifying breakout and second leg opportunities.

How does the reviewer approach small gaps in the market?

When there is a small gap, the reviewer assumes there will be a trading range. They use the prior trading day’s bars (in this case, Friday’s bars) to analyze the market behavior and identify potential price action setups.

What pattern did the reviewer observe going into the day’s session?

The reviewer identified a spike and pullback followed by a channel formation, which was interpreted as a bear trend. They also considered a potential triangle pattern forming from higher lows and lower highs, with both bulls and bears having different breakout expectations.

How does the reviewer define and use 'breakouts' in their analysis?

The reviewer defines breakouts as price movements that occur after a period of consolidation. They emphasize that breakouts tend to get a second leg about 95% of the time, and they base their trading strategies on identifying and trading these breakouts and the subsequent second legs.

What are the key principles the reviewer follows for trading?

The reviewer focuses on trading breakouts and second legs, viewing price action as a fractal phenomenon. They also stress the importance of studying market behavior and price movement, grounding their strategies in first principles and market studies to shape their trading beliefs.

What is the significance of 'volatility contraction' in the context of this review?

Volatility contraction refers to a period of reduced price movement, forming a tight range. The reviewer notes that volatility contraction often leads to a breakout, either in the direction of the prevailing trend or against it. They observed this behavior throughout the session, indicating possible trend shifts or breakouts.

How does the reviewer identify trends and reversals?

The reviewer uses price action, breakout patterns, and trend lines to identify potential trend reversals. They observe key signs such as a trend line break, higher lows, lower highs, and consolidation phases that suggest a reversal or continuation of the trend.

What does the reviewer mean by a 'second leg' in their analysis?

A 'second leg' refers to the continuation of a price move after an initial breakout. The reviewer emphasizes that breakouts usually have a second leg, which provides more confirmation of the initial move's strength. This second leg often appears after a minor pullback or consolidation.

Why does the reviewer prefer simple trading systems?

The reviewer prefers simple trading systems because they believe they are more effective in guiding decision-making. Simplicity allows them to focus on essential elements like breakouts, second legs, and key price action patterns, minimizing unnecessary complexity and emotional involvement in trading decisions.

What role does the moving average play in the reviewer’s analysis?

The moving average, specifically the 20 EMA, serves as a reference point for average price action. The reviewer notes that price action far above or below the moving average indicates strong momentum, while a return to the moving average signals a potential mean reversion, which could lead to a correction or reversal.