Emini bears want strong close follow-through

Trading Update: Thursday September 15, 2022

Emini pre-open market analysis

Emini daily chart

• As expected, yesterday was a disappointment for the bears, confirming the market is still in a broad trading range on the daily chart.
• While the bears failed to get follow-through yesterday, they will try hard to get a strong close follow-through today.
• Trading ranges always disappoint traders with bad follow-through, and one can use disappointment to help measure trading range price action.
• Some traders likely bought the selloff down from September 12, and they are disappointed enough by Monday that they will probably be happy to exit on a bounce.
• Since bulls likely bought around the 4,000 considerable round number and the midpoint of the four-bar rally ending on September 12 (4,020), both price levels will probably be resistant and find sellers.
• The reality is that the market is still in a broad trading range, so the market will probably get back up to the September 12 high at some point. However, the market may have a couple of legs down first.
• The bears have support levels below that they will have to break below, the July 26 low, and two breakout points of the August rally (June 28 and July 8).
• The daily chart may form a triangle here, which means the range could get tighter as bulls and bears fight over a breakout.
• Monday’s selloff will probably need a second leg down. However, traders want to see how deep the pullback will be first. Since the market is in a trading range, the market may have to go above 4,000 and 4,020 first before the bears can get a second leg down.
• The bears need to get foll0w-through today, or else more and more traders will agree that the market will have to pull back before any attempt at a second leg down.
• Bears who sold the September 13 close have a lot of risk. Since they sold betting on continued momentum down after September 13, if the market stalls here, those bears could be quick to exit, which would cause a bounce. However, there will be more sellers above, but the deeper the pullback, the market traders will be willing to buy around the September 1 price level betting on the bottom of a trading range.
• The bulls probably want a micro double bottom here and are not all that interested in buying the first reversal up, although some might for a scalp; it is not ideal.

Emini 5-minute chart and what to expect today

• Emini is down 13 points in the overnight Globex session.
• The Globex market has been mainly going sideways in the overnight session.
• Traders should expect a trading range open and not be too eager to bet on trending behavior.
• Most traders should wait 6-12 bars before placing a trade. This is because the odds favor sideways, meaning most breakouts fail in the first hour. Since most traders should avoid limit orders, they should step aside until there is a credible stop entry or breakout with follow-through.
• A credible stop entry could be a double top/bottom or a wedge top/bottom.
• The bears will try and get a bear trend day and get follow-through after the September 12 selloff, so traders should be open to a trend day.
• However, if today is going to be a trend day, there will be plenty of time to enter in the direction of the trend so traders can wait for a clear breakout with follow-through.
• The essential thing on the open is to be patient. Everyone wants to trade, but you do not get paid for placing lots of trades. You get paid for taking good setups that have strong math behind them.
• Remember that most breakouts fail on the open, so there is no rush to enter.

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 Forex market has been mainly going sideways in the overnight session.
• Traders should expect a trading range open and not be too eager to bet on trending behavior.
• Most traders should wait 6-12 bars before placing a trade. This is because the odds favor sideways, meaning most breakouts fail in the first hour. Since most traders should avoid limit orders, they should step aside until there is a credible stop entry or breakout with follow-through.
• A credible stop entry could be a double top/bottom or a wedge top/bottom.
• The bears will try and get a bear trend day and get follow-through after the September 12 selloff, so traders should be open to a trend day.
• However, if today is going to be a trend day, there will be plenty of time to enter in the direction of the trend so traders can wait for a clear breakout with follow-through.
• The essential thing on the open is to be patient. Everyone wants to trade, but you do not get paid for placing lots of trades. You get paid for taking good setups that have strong math behind them.
• Remember that most breakouts fail on the open, so there is no rush to enter.

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

• The market formed a parabolic wedge reversal around 7:00 PT. It is common to see a reversal of the initial move 50% of the time so that traders would exit longs on the second entry shorten 7:20 PT.
• The bears got a strong breakout, with follow-through which trapped scale bulls and led to a couple of legs down.
• The market formed nested wedge bottoms around 9:00 and reversed back to the 7:30 breakout, which is common in a trading range.
• The bulls got a bull breakout around 10:0. However, it was a buy vacuum test of where the bulls got trapped (around 7:15). The bulls would likely not be interested in buying around 10:00 since the market failed at this price level around 7:15.
• The bears sold off back to the low of the day.
• Overall, today was a trading range day, and it is essential to realize that most of the moves are vacuum tests of support and resistance. That means when the market satisfies an examination of the support/resistance level; the magnet effect turns off, and the market continues sideways.
• I will post a video 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.

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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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