Trading Update: Monday August 7, 2023
S&P Emini pre-open market analysis
Emini daily chart
- The Emini bears are testing the June 30th high and trying to close the gap. The bulls want the opposite and to keep the gap open.
- The odds are the gap will close, and the bears will get a close below the June 30th high.
- The bears’ next target is the gap above July 11th. A gap between two closes is a sigh of momentum and strength. The bears want to fill the gap and close below the July 11th high.
- Last Friday (8/4), the Emini formed a strong outside down bar, closing below last Thursday’s low.
- The bears hope they can continue to get follow-through selling after last Friday’s close. However, the bears will probably be disappointed today or tomorrow. This means traders should expect sideways trading for a day or two.
- The selloff to the August 4th low is probably strong enough to get a second leg down. This means that the odds are that any rally will lead to a lower high.
- However, the market may have to bounce before the bears reach the July 11th high.
- If the bulls get a reversal up, they must show signs of increased buying pressure. Until then, the odds favor more sideways to down.
Emini 5-minute chart and what to expect today
- Emini is up 14 points in the overnight Globex session.
- The overnight Globex market has had much sideways trading.
- The bulls want to disappoint the bears following last Friday’s outside down bar. This means that today has the potential to form an early low of the day or possibly a bull trend from the open.
- More likely, traders should expect sideways trading on the open for at least the first hour.
- Most traders should consider not trading for the first 6-12 bars. By waiting for 6-12 bars, a trader gains certainty on the day structure and avoids getting trapped on the open.
- It is common to get large breakout bars on the open that fail and reverse. This can oppose a trader to large losses due to the bars often being big. The range often gets smaller as the day progresses, making it difficult for a trader to recover from big losses on the open.
- Most traders should try and catch the opening swing that often forms after a double top/bottom or a wedge top/bottom.
- Traders should pay attention to the open of the day, especially if the market is below it and the bear has been weak. If the price is not far below the open, traders should be mindful of a possible rally above the open last in the day since the bulls want a close above the open to disappoint the bears.
Friday’s Emini setups
Al created the SP500 Emini charts.
EURUSD Forex market trading strategies
EURUSD Forex daily chart
- The EURUSD rallied after testing the July 6th buy signal bar high.
- While the bears did an excellent job with the selloff down from the July 18th high, the bars have had much overlap. This increases the odds of a trading range developing and the market going sideways.
- The Bulls got a strong entry bar following the August 3rd buy signal bar. While this bar was strong, it was more likely to lead to a trading range, with a deep pullback today.’
- The bears want to create a low 1 short with a bear bar closing on its low. However, there will probably be buyers, and the market will go sideways.
- The bulls hope to get a strong upside breakout during the U.S. session, creating another bull follow-through bar.
- Overall, the odds favor a disappointment bar today, and both the bulls and bears are getting disappointed with today’s close.
Summary of today’s S&P Emini price action
Al created the SP500 Emini charts.
End of day video review
Here is YouTube link if video popup blocked:
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.