Emini bears likely disappointed after yesterday’s impressive selloff

Trading Update: Wednesday September 14, 2022

Emini pre-open market analysis

Emini daily chart

• Yesterday was a very impressive bear selloff, completely reversing the recent four consecutive bull trend bars. But bears likely disappointed after selloff today.
• The selloff from yesterday is a strong enough surprise that the market will likely have a second leg down.
• Traders must be aware that the market may pull back first before the bears get their second leg down from yesterday.
• The rally up to September 12 and the one bar selloff (yesterday) is creating a big up, big down, so considerable confusion and trading range are likely.
• There will be trapped bulls that bought during the selloff yesterday, betting on a higher low and second leg up after the four-bar rally to September 12. These bulls are trapped and will probably sell out of longs on any pullback. The bears know this and will likely sell any escape.
• The bulls hope this selloff is just a sell vacuum test of the September low and 4,000 considerable round number but the size of yesterday’s bar increases the odds of slightly lower prices.
• Traders will pay close attention to the follow-through today.
• The bears want today to be another intense bear trend day, but chances are the bears likely disappointed today, and the day will have a bull close or weak bear close.
• The market is in a trading range, and just like the bull rally up to September 12 was disappointing for the bulls, yesterday’s selloff will likely disappoint the bears soon. Disappointment is the hallmark of a trading range, and since the market is still in a trading range, traders should expect disappointment.
• Overall, yesterday was an impressive bar that will likely get a second leg down. What traders do not know is how deep the pullback will be first.

Emini 5-minute chart and what to expect today

• Emini is up 6 points in the overnight Globex session.
• The Globex market has been going sideways since yesterday’s close.
• Traders should expect most of the day to be a trading range day until they are proven otherwise.
• Yesterday was a very climactic day, so there is a 75% chance of at least two hours of sideway trading starting by the end of the second hour. There is a 50% chance of continued selling on the open before the two hours of sideways trading.
• Even though the odds favor a trading range open, traders must not be in denial if the market is getting consecutive trend bars and forming a trend from the open or down.
• Traders should consider waiting for 6-12 bars before placing a trade. The reason is that the market is likely to have multiple reversals on the open.
• Traders can also consider waiting for a credible stop entry, such as a double top/bottom or a wedge top/bottom.
• Lastly, traders should pay close attention to the open of the day as it will likely be an essential magnet all day as bulls and bears fight over the close of today’s bar.

Yesterday’s Emini setups

Al created the SP500 Emini charts.

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. These therefore are swing entries.

It is important to understand that most swing setups do not lead to swing trades. As soon as traders are disappointed, many exit. Those who exit prefer to get out with a small profit (scalp), but often have to exit with a small loss.

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

• The bears got a big bear breakout bar closing on its low yesterday. However, it is closing back at the 1.000 big round and the bottom of a likely trading range.
• While the bear breakout is big, it is forcing traders to sell at the bottom of the trading range, and while there will likely be a second leg down, more traders may buy the close of the bar for at least a scalp up.
• Traders will pay close attention to the follow-through today. If today is another big bear trend bar like yesterday, the market will be Always In long, and the probability will favor lower prices.
• The reality is that today will probably disappoint the bears and be a bull close or weak bear bars making traders question if selling down here is a bad idea.
• The market is between the 1.0200 round number and the 1.000 big round number and will probably go sideways between those two prices for at least a couple of days.

Summary of today’s S&P Emini futures price action and what to expect tomorrow

Al created the SP500 Emini charts.

End of day review

• Delayed. There is an audio issues with this End of Day video, I hope to have it fixed and upload as soon as possible.

See the weekly update for a discussion of the price action on the weekly chart and for what to expect going into next week.

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Trading Room

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.

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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.

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