Trading Update: Monday April 25, 2022
Emini pre-open market analysis
Emini daily chart
- Emini bear breakout below wedge bottom.
- The bears now have two consecutive bear bars, one completely below the moving average.
- Right now, there is at least a 60% chance the bears will get some kind of measured move down.
- The bulls tried three times (1/24, 2/24, 3/14) to reverse up and failed. This increases the odds that the market will have to try to go down. Usually, when the market tries to do something and fails, it will have to try the opposite.
- The bears will probably reach the March 14 low. However, the bulls will try hard to defend the February low and prevent the market from falling below it.
- If the market gets below the February low, bulls will probably give up, and the market may get a bear breakout and measured move down based on the February – March trading range, which would take the market down to around 3,600.
- Since the February low is a credible bottom if the market falls below it, there is a 50% chance the market will fail to break below and reverse back into the February – March range.
- Overall, the bears have two big bear bars on the daily chart. They are probably strong enough to make the market Always In Short, and the odds favor a second leg down. The bulls hope today will be a strong bull reversal bar, reversing most of Friday. While that is possible, it is not likely. The market will likely go sideways to down for a couple of legs and reach the March 14 low.
Emini 5-minute chart and what to expect today
- Emini is down 8 points in the overnight Globex session.
- The Emini is likely to continue sideways to down to the March 14 low over the next several trading days, regardless if the bulls get a bounce.
- Thursday and Friday of last week were very climactic, meaning traders should expect a 75% chance of sideways trading for two hours today.
- While the market may get a third consecutive big bear close on the daily chart, it is not likely.
- Since the market is likely to gap down, traders should expect a test of the moving average and likely sideways trading.
- As always, most traders should wait for a credible stop entry or a breakout with follow-through before entering and consider not trading for the first 6-12 bars.
Friday’s Emini setups
Al created the SP500 Emini charts.
EURUSD Forex market trading strategies
EURUSD Forex daily chart
- The EURUSD is currently breaking below the March – April trading range.
- The bears had a double top sell signal bar on April 2, and they are hopeful it will lead to a successful bear breakout and measured move down to 1.0430, which would be below the 2020 lows. The bears ultimately hope that this selloff will reach the 2017 lows.
- The bulls are hopeful today will disappoint the bears and set up a failed bear breakout, which is more likely.
- Traders will pay close attention to today’s close. If it closes on its low, traders might be willing to sell, betting on the breakout and more down. However, if today closes as a weak bear bar, especially if it closes above the lows of the past two weeks, bears may exit, which might cause a reversal.
- The bulls hope that this current selloff is a retest of the April 19 lows, setting up a lower low major trend reversal that will test the March high and ultimately test the February highs.
- Overall, traders should pay close attention to today’s intraday price action. There is potential for a strong reversal up today or tomorrow, which would be a failed breakout of the March – April 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
- The odds favored the market going sideways for at least two hours today, which it did on the open.
- The bulls ended up getting a higher low major trend reversal that led to an endless pullback and strong rally into the close.
- Today created a strong bull reversal bar on the daily chart and is a reminder that the market is in a trading range on the daily chart.
- The bulls hope the buy signal bar on the daily will lead to a second leg trap and the bear want this to be a pullback from the two consecutive bear bars last Thursday and Friday
See the weekly update for a discussion of the price action on the weekly chart and for what to expect going into next week.
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.
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.
Hi Brad, could you explain why bar 23 would have been a bad buy? thanks
Hi there, may I say: i think its not that bad, however it’s in the upper 3rd of a trading range not far below the ema, in a downtrend.
I’d say it’s in the lower portion of a trading range from the open.
Its funny, I got trapped on that trade too, I was on 9 points profit and did not take it. As Al said management makes a big part of trading!
Could be good for scalp and very fast profit taking and exit while PA arrives in the ema20 top area. Bears have kept pulling back from ema down for the past 2 and a half days thuse most likely they will try to do so further. For a swing trend it would be better to see several bull closes above ema and than considering buying especially when bears are in control.
While bar 23 is an okay swing buy, itis forces traders to buy right under the moving average and in the middle of a tight trading range. Also, bar 22 is a bad buy signal bar, increasing the probability of sellers above.
Bar 23 also risks being a third push-up and a wedge top, so if there is a bear bar on bar 24, it may lead to a couple of legs down. The above comments regarding this question are valid as well.