Trading Update: Wednesday October 11, 2023
S&P Emini pre-open market analysis
Emini daily chart
- The Emini reached the 4,400 big round number and the August 18th low yesterday.
- Since the daily chart was likely in a trading range, the odds favored the August 18th breakout point low getting tested and allowing the bulls who bought this low and lower to make money.
- The bulls have done an excellent job with the rally over the past three trading days. The odds favor the first reversal down being minor and the Bulls getting a second leg up.
- It is essential to understand that while the market is Always In Long, any rally the bulls get will likely become a bull leg in a trading range, not a bull trend. This means the Bulls will probably be disappointed over the next few weeks.
- The bears are hopeful that the current rally from the October low will become a lower high in the bear trend, leading to lower prices.
- More likely, the channel down that began in July is a bear leg in a trading range. This means the rally could be deep and test up to 4,500.
- Overall, the odds favor a second leg up. However, the Bulls will probably be disappointed soon. Since the market is in a trading range, traders should be prepared for a deep pullback before the bulls can get a second leg up.
Emini 5-minute chart and what to expect today
- Note: I am traveling in Europe and typing this report several hours before the open of the U.S. Session.
- The bears want to trigger the sell below yesterday’s low. However, since it is a bull bar, buyers will likely not be far below it.
- The bears also want to pause the buying and they will try to get a close below the open of the day. This means that the open of the day and yesterday’s low will probably be magnets today.
- Because of the strong buying over the past couple of days, it is reasonable to assume that the market may try and pull back for a day or two. This means today and tomorrow will probably be a trading range or a bear trend, not another bull trend day.
- There is an 80% chance that today will form a trading range open and only a 20% chance of a bull trend from the open. This does not mean the market will not form a brief rally or selloff on the open. Any rally or selloff on the open will probably be a leg in a trading range.
- Since the odds favor a trading range open, traders can wait for the formation of a double top/bottom or a wedge top/bottom before looking to place a trade. This will allow a trader to try and catch the opening swing that often begins before the end of the second hour.
- Lastly, traders should pay attention to the August 18th low and 4,400 price level as the market may have difficulty closing above it on the daily chart.
- Lastly, traders must be patient on the open and try not to force a trade. There is plenty of time to place a trade; if a setup does not look like an idea, it is better to pass on the trade.
Emini intraday market update
- The Bears have a trend from the open bear trend. However, it looks like a leg in what will become a trading range.
- The bears are hopeful that they will be able to break out below yesterday’s low. There will likely be buyers below yesterday’s low if we get there.
- As of bar 10, the bulls have the argument of a parabolic wedge bottom. They are hopeful that they will get an opening reversal up.
- The problem the bulls face is the channel down is tight and has open gaps. This reduces the probability of a strong reversal and increases the odds of any upside reversal being minor.
- There are FOMC minutes at 2:00 EST that might increase the volatility today. It is reasonable for trades to be flat 30 minutes before the report is released. It is important to note that this is only the minutes, not the actual FOMC meeting, so traders will not expect the same volatility as a typical FOMC report.
- Overall, there is a 60% chance that the bear trend from the open will evolve into a trading range day and not remain a bear trend all day.
- As of bar 12, if is reasonable for bears to exit and wait to see what the bulls can do.
Yesterday’s Emini setups
Al created the SP500 Emini charts.
EURUSD Forex market trading strategies
EURUSD Forex daily chart
- The EURUSD is testing above the September 29th Major lower high. The market is likely converting into a trading range and will begin to go sideways for the next couple of weeks.
- Overall, traders should expect sideways trading and the bear channel to evolve into a trading range on the daily chart.
- Because of the weekly chart being in a bear breakout on the weekly chart, the bears will likely get a second leg down. This means that the upside is probably limited on the daily chart.
Summary of today’s S&P Emini price action
Al created the SP500 Emini charts.
End of day video review
Live stream videos to follow (Brad travelling).
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.