Trading Update: Monday August 29, 2022
Emini pre-open market analysis
Emini daily chart
- Emini bears likely disappointment soon.
- Friday was a substantial bear-trend bar, which was a surprise. At the moment, the odds favor at least a small 2nd leg down over the next couple of days.
- Since Friday is a climactic bar, it is possible that there might be more buyers than sellers today or tomorrow, and the market forms a pullback before the bears get the 2nd leg down following Friday’s selloff.
- While the bulls hope that Friday is a 2nd leg trap that will lead to exhaustion and that the market reverses Friday’s entire bar either today or tomorrow, it is not likely.
- While I think today might be a bull bar that would disappoint bears, odds still favor at least a small second leg down after any pullback. This means that some traders will wait and see the pullback first before looking to sell.
- It is possible that the follow-through will look like April 22, but the bears will likely be disappointed with today.
- Overall, the market is still likely in a trading range, and Friday’s breakout will probably lead to a higher low, and the market will continue to go sideways.
- The bulls want a big disappointment bar today, which will increase the odds of sideways, and the bears want today to be a big bear follow-through bar which is unlikely. Even if today is a bull bar closing on its high, it would trap bears who sold Friday’s close.
- More likely, if today is a bull bar, there will still likely be sellers above, and the odds will favor the 2nd leg down.
Emini 5-minute chart and what to expect today
- Emini is down 10 points in the overnight Globex session.
- The Globex market has been in a trading range since Sunday’s open.
- The market will likely continue sideways going into the U.S. Session open.
- Today is an important day as institutions decide on following last Friday’s bear breakout bar. The odds slightly favor disappointment, and today is a trading range day. However, there is potential for today to be a big trend day up or down (for reasons stated above).
- As always, traders should expect a limit order market on the open and for breakouts to fail.
- Most traders should wait for 6-12 bars before placing a trade. They should also consider waiting for a credible stop entry, such as a double bottom/top or a wedge bottom/top.
- Traders can also wait for a credible breakout with follow-through before entering.
- The most crucial thing is to be patient on the open and not be in a rush to take a trade.
- Lack of trading is not what causes traders to lose money. It is almost always overtrading and taking too many trades with poor math, so do not be a statistic, and if confused with what the market is doing, wait patiently.
Friday’s Emini setups
EURUSD Forex market trading strategies
EURUSD Forex daily chart
- The EURUSD is forming a second failed breakout of the 1.000 big round number following the August 22 selloff.
- Bears were disappointed with the follow-through over the past four trading days, that more bears are buying back shorts at the August 22 close.
- The bulls see this as a second failed breakout of the 1.000 big round number and will see this as a great value buy to initiate new longs.
- The August 22 four-bar selloff was strong enough for a second leg down, and the bulls are hopeful this is the second leg down.
- Traders need to be aware that the market may get a two-legged pullback where the rally up to August 26 is the first push, and then after a second leg up, the market gets a 2nd leg down following the August 22 selloff.
- The bulls need today to be a good buy signal bar closing on its high. This would increase the odds of more bears exiting above and the bulls getting an upside breakout.
- At a minimum, the bulls see the past five trading days as a micro double bottom, and they want a breakout above the neckline (August 26) high and a measured move up to the August 11 low.
- Although the August 11 low was the third push-up in a likely leg in a trading range, bulls would buy the low and scale in lower. They were confident that the market would return to this August 11 low at some point, which is probably correct. Those bulls may scale in above today’s buy signal bar, assuming it closes on its high.
- Overall, traders will pay close attention to today’s bar. If it closes on its high with a big body, more bears will exit above due to the risk of a double bottom and measured move up the August 11 high. If it closes as a weaker bar, the odds will favor a pullback in the bear selloff down to August 22. That would increase the odds of the bears getting a larger 2nd leg down from August 22.
Summary of today’s S&P Emini futures price action and what to expect tomorrow
End of day video review
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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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.