Trading Update: Monday October 10, 2022
Emini pre-open market analysis
Emini daily chart
- Last Friday, the bears did a great job reversing the bull breakout that began early last week. While the bears want follow-through, bears likely disappointment today.
- The bears hope this is the start of the move that will break far below the June 17 low and sell off 300 points, testing the 2020 Pre-Pandemic high.
- The bulls saw last Friday as a higher low, leading to a second leg up from the October 5 rally.
- While the market has been in a broad bear channel on the daily chart, it is more of a broad trading range that sloped down.
- The odds favor the bulls forming a bottom down here and the bears failing since the market is at the bottom of a trading range. However, if the bears succeed, the market could form a strong bear breakout and sell off quickly to the pre-pandemic highs.
- It would not take much for everyone to become convinced the market is going lower. If the bears get strong follow-through selling over the next couple of days, that could be enough to make everyone agree that the bears are going to win and all the institutions start selling. The market could then race down to the 2020 Pre-Pandemic high.
- Overall, traders should expect sideways to up over the next few weeks.
Emini 5-minute chart and what to expect today
- Emini is up 15 points in the overnight Globex session.
- The overnight Globex session has been going sideways, with a late rally. It will probably continue sideways into the opening U.S. session.
- Traders should expect a trading range open and limit order market on the open.
- In general, most traders should consider waiting for 6-12 bars before placing any trades.
- Traders can also wait for a credible stop entry, such as a double bottom/top or a wedge bottom/top.
- Overall, traders should expect a trading range day until proven otherwise. Traders should also be mindful that the day may be a bull trend day or close above the open, which would create bad follow-through on the daily chart after Friday’s big bear trend bar.
Friday’s Emini setups
Al created the SP500 Emini charts.
EURUSD Forex market trading strategies
EURUSD Forex daily chart
- The bears have done a great job disappointing the bulls creating a big up, big down situation. The odds favor sideways when you have a big move up followed by a big move down.
- The bulls see this current selloff as a pullback from the October 4 rally.
- The bears see the October 4 rally as a pullback from the bear breakout that started in late September. They also see the current selloff as the start of a trend resumption down.
- The problem the bears face is that the market is in a broad bear channel with decent buying pressure developing. Channels evolve 75% of the time into trading ranges, which means the odds favor sideways to up soon since this bear channel has lasted so long.
- The selloff over the past four days is strong enough that the bulls will need some double bottom before they can get some second leg up from the October 4 rally.
- The bears want to continue to create an endless pullback and break below the September lows.
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
- Today was a bear trend from the open that led to a midday reversal up.
- In general, when you have a trend from the open, there is a 60% chance the day will for a trading range.
- The bears got a sell-the-close market early, leading to a couple of legs down to 7:00 PT.
- The bulls got a wedge bottom, leading to a lower high around 7:30 and lower prices.
- The bears created a surprise breakout around 7:45 that led to a measured move down to around the 9:45 low.
- The market formed a parabolic wedge around 9:45, and the bulls reversed up; however, the reversal ended up creating a 2nd leg trap leading to sideways trading for the rest of the day.
- Overall, the selloff was good for the bears; however, midday reversal up created disappointment and is a sign of trading range price action on the daily chart.
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.