Trading Update: Monday March 14, 2022
Emini pre-open market analysis
Emini daily chart
- The Emini becoming neutral is going sideways, forming a triangle.
- The market is deciding if it will have to reach the February 24 low and possibly break below it or form another higher low and continue sideways to up.
- The bulls are hopeful that if the market does test lower, it will form a double bottom major trend reversal with the March 8 low.
- The bears want the bear breakout and test down to the 4,000 big round number.
- Next, the bears would want a test of the pre-pandemic highs (March 2020). However, unlikely that the market will get there this year.
- The odds are that any bear breakout below the February low will fail, and the market will reverse back up.
- What traders do not know is whether the February low will remain for the rest of the year or will the market need to get one more low below February.
- The next question traders have is if the market will rally strongly to the all-time high or whether the market will go mostly sideways and continue in a trading range.
- The odds are that the market will continue to go sideways in a 400 point range (maybe 4,100 – 4,400) and continue the trading range trading.
Emini 5-minute chart and what to expect today
- Emini is up 15 points in the overnight Globex session.
- The Emini has been in a large trading range during the Globex session, so the market will likely be neutral on the open.
- The daily chart has become very neutral, so the odds of a breakout up or down are becoming very close to 50-50%. Note, when I say breakout, I mean a test of the February low compared to a test of the March 3 high.
- Traders should expect sideways on the open and limit order market trading and wait for a strong breakout with follow-through or a credible stop entry before swing trading.
- Since the market will likely open in the middle range, traders should be careful about buying too high or selling too low.
Yesterday’s Emini setups
Al created the SP500 Emini charts.
EURUSD Forex market trading strategies
EURUSD Forex daily chart
- The EURUSD had a strong reversal over the past two days following the two consecutive bull bars ending on March 9.
- The bulls successfully tested the 3-month trading range low and quickly reversed down.
- While the bears want the reversal down from March 10 to be a measuring gap with the 3-month trading range and lead to a measured move down, the odds are the market will go sideways to up.
- This means the odds are that the 3-month trading range will likely become a final flag reversal up. What traders do not know is how long that will take. The market could go sideways at this price level a long time before reversing up and testing the highs of 2021.
- The bulls are hopeful that today will be a strong bull close and become a breakout pullback following the two consecutive bull bars last week.
- More likely, the market will continue sideways over the next couple of days.
Summary of today’s S&P Emini futures price action and what to expect tomorrow
- Al will post chart after the close.
Al created the SP500 Emini charts.
End of day summary
- The bulls had an opening reversal up on bar 3, leading to a parabolic wedge top on the open.
- While the rally up to 8:00 AM (PST) was strong, it was climactic, which increased the chances of sideways and more trading range price action.
- 8:00 AM was also bar 18, which and if there is a reversal round bar 18, it can often lead to a high or low of the day, so traders would pay extra attention there, especially with it being the third push up in a wedge.
- After the wedge top, the bears got three consecutive bear bars. This made bulls hesitant to buy at the moving average and led them to give up around 8:30, and the market went Always in short.
- This first target for the bears was a test of the open of the day; however, the selloff that led to the open was so strong the odds were the market was going lower, so bears would likely look to sell any rally.
- The led to a breakout below the bar 2 low and a bottom around the low of the day where the market went sideways into the close.
- Overall, it is important to remember that 50% of the time the opening move will have a major reversal as it did at the high of the day. Also, when the market is selling off sharply as it did when it was breaking below the day’s low (9:15 am), it is important not to be too eager to buy because it is easy to get trapped trying to bet on retracement back to the moving average. Most traders would be better off looking to sell a rally when the market is selling off as strong as it was.
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. I talk 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 I mention time, 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.