Trading Update: Monday November 7, 2022
Emini pre-open market analysis
Emini daily chart
- Emini bears got a surprise breakout on November 2, and bears second leg down wanted, possibly testing down to the October 21 low.
- The bulls want to trap the bears, rally above the November 1 high, and test the 4,000 big round number, which will likely happen. The problem the bulls face here is that the market will probably need a second leg down after the November 2 bear bar.
- While the odds favor a second leg down, the leg might be brief and fall under the November 3 low for a bar or two and reverse up, which would likely satisfy a test of the October 21 low.
- Traders should be mindful that the market may have to reach the November 1 low before the bears get their second leg down, so the pullback for the bears might be deep. A test of the November 1 low would stop out the breakeven bears, which frequently happens before the second leg occurs.
- The bears hope the November 2 bear breakout is the start of a double top that breaks below the October 13 neckline and goes for a measured move down, which would test the monthly chart bear trend line (2008, 2020).
- Overall, the odds favor a test of the 4,000 big round number; even if the market test the October low, the odds will favor a failed breakout and test up to 4,000.
Emini 5-minute chart and what to expect today
- Emini is up 20 points in the overnight Globex session.
- The market has been rallying during the overnight Globex, testing Friday’s high.
- The overnight Globex rally is likely a second leg up following Friday’s late session rally.
- Traders should expect a limit order open, meaning most traders should consider waiting for 6-12 bars.
- In general, the first initial move on the open has a 50% chance of a reversal. This means that breakouts are more likely to fail, so most traders should wait for at least 6 bars.
- Swing traders can also wait for a credible stop entry, such as a double top/bottom, or a wedge top/bottom, before placing a trade.
- Today will likely be a trading range day, but traders should also be open to a trend day up or down.
- The most crucial thing is to remember that price is truth, and trust must not be in denial. One must trade the chart in front of them, not what they hope will happen.
Friday’s Emini setups
Al created the SP500 Emini charts.
EURUSD Forex market trading strategies
EURUSD Forex daily chart
- The EURUSD had a strong reversal on Friday, testing the 1.000 big round number.
- The bulls are trying to get follow-through testing the October 26 to buy the close bar. They want the rally-up that test on October 26 to be strong and convince traders to buy more at the October 26 (purple line) price level.
- The bulls ultimately want an upside breakout of the October 26 close and rally up to the July and September high.
- The bears will see any rally that tests the October 26 close as a double top and will try their best to form a second reversal down. Next, the bears will want a test back down to the November 3 close and, ultimately, a test of the September low.
- Overall, the daily chart has been in a bull channel since the middle of 2021. Bear channels should be considered bull flags, meaning the bulls should get a rally lasting several months on the daily chart to convert the market into a trading range. The bulls have formed a trading range on the daily chart, but the broad range will likely need to be at least 500 pips higher.
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, I will update soon.
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.