Trading Update: Friday March 17, 2023
Emini pre-open market analysis
Emini daily chart
- Emini bull surprise and strong reversal yesterday, testing the 4,000 big round number. This is a strong enough breakout to increase the odds of a 2nd leg up.
- The March 15th buy signal bar was a 2nd entry buy and a 2nd failed breakout attempt of the 2022 Close.
- Because the March 13th selloff was likely a bear leg in a trading range, many traders bought above yesterday’s bar.
- Typically, when the market is in a trading range, it is only a matter of time before the breakout points (gaps) get tested, and the market will close them.
- Bears are willing to sell low in a possible trading range if they suspect the movement is strong enough to drive the market lower. When the momentum dries up as it did from March 13th to March 15th, traders begin to buy. Bear buy back shorts, and bulls buy to go long.
- Yesterday’s bar is strong and a sign of urgency. This increases the odds of a 2nd leg up after any pullback.
- One logical target for the bulls is the March 6th low. Bulls got trapped buying this low during the bear breakout on March 7th.
- Several bulls would exit on March 7th because of the risk of a downside breakout. However, many bulls reestablished longs above the March 15th buy signal bar.
- The bulls who sold out of longs on March 7th went flat because their premise was no longer valid. They were willing to buy high if the market was in a bull trend. However, March 7th confirmed the market was in a likely Trading range, and the bottom of the range could be the 2022 Close.
- Because of the strength of yesterday’s bar, it is reasonable for those bulls to consider holding their longs, taking a chance that the market will test back up to the bar on March 6th low, where the bulls got trapped.
- The bears want to prevent the market from allowing the March 6th bull out of the trade. At a minimum, the bears will likely need some kind of double top before forming a credible swing short.
- If the bears can get a strong selloff today, it would create a 2nd entry short (Low 2). However, the bears will have to make a strong bear reversal bar to undo the damage caused by yesterday’s strong breakout bar.
- It is possible today that a big bear bar is closing on its low. However, I suspect there are buyers below today’s bar, even if it is a bear bar. Some bears are trapped in a losing short position because of the March 16th bull breakout bar. These bears will likely use any pullback to exit shorts with a smaller loss.
- Some bulls are trapped out of the market. They will likely use any pullback to establish longs in order not to miss any potential rally.
- Overall, traders will pay close attention to today. If today is another strong bull close, it will increase the odds that the market is going above the March 6th low. More likely, the bulls will be disappointed with today’s close, and it will remind traders that the market is in a trading range. Because of Yesterday’s big bull breakout bar, traders will expect a 2nd leg up.
Emini 5-minute chart and what to expect today
- Emini is down 22 points in the overnight Globex session.
- The Globex market has been in a selloff since the early morning hours. It is likely testing yesterday’s breakout point (3,945). This is an area where bears got trapped before the strong upside breakout during the U.S. Session.
- Traders should have a trading range open, which means most traders will expect the first 6-12 bars to have a lot of trading range price action and go sideways.
- Most traders should try and catch a swing trade on the open. It is common to begin before the end of the second hour after forming a double top/bottom or a wedge top/bottom.
- Today is Friday, so weekly support and resistance are important. This means traders should be open to the possibility of a surprise breakout late in the day as traders decide on the close of the weekly chart.
Emini intraday market update
- The Emini gapped down and went sideways for the first 9 bars of the day.
- The bulls tried to break out above the moving average on bar 7; the market reversed on bar 8 (7:10 AM PT), forming a Low 2 short. This was a reasonable short for a possible high of the day.
- The bears got a 10-bar bear microchannel don to bar 16 (7:50). While the channel down was tight, it was also a parabolic wedge bottom. This increased the odds of sideways trading.
- The market has probably seen the high of the day. The bulls must develop more buying pressure before they can reverse the selloff.
- So far, today is bad follow-through on the daily chart. The bulls have a strong bull breakout, and so far, they are disappointed.
- At the moment, the bulls have no sign of a bottom, and until they can develop more buying pressure, traders should expect every bull reversal attempt to fail.
Yesterday’s Emini setups
Al created the SP500 Emini charts.
EURUSD Forex market trading strategies
EURUSD Forex daily chart
- The EURUSD daily chart had a strong bear outside a bar two days ago. While it was a surprise bar, it followed a 5-bar bull micro channel, increasing the probability of buyers below.
- Bull that bought the March 14th low got trapped, and today’s bars are testing its low.
- Most of the bulls that bought the March 14th low did not expect the selloff to fall below the March 8th low. This means there are probably sellers at the March 14th low.
- The bears want a 2nd leg down after the March 15th outside down. Most bulls hesitate to buy above March 16th because traders expect the first reversal to fail.
- If the bears get a 2nd leg down, they need signs of strength. Otherwise, today will probably form a bad Low 1 short, and the bulls will buy below it. This would create a 2nd entry buy and a possible bottom.
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
- Live stream video trial replacement of end of day review coming 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.
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.