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Emini Bears Second Leg Down wanted after November 2 Breakout

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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

Emini sell climax and sell vacuum test of EMA with strong bull trend reversal. Bears second leg down wanted.
Above is the version that I post every day. Because I often get questions about what Daily Setups chart Encyclopedia members see, today I am including the example below of that version.
Daily Setups chart: Sell Climax - 3 more big swings then close near open

Al created the SP500 Emini charts.

Here are several reasonable stop entry setups from Friday. 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

EURUSD Daily: Market Probing 1.000, Bulls Want Follow-through
  • 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

Emini trading range open with failed bull and bear breakouts of triangle and then midday breakout into bull trend after buying pressure

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.

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.

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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