Trading Update: Tuesday October 11, 2022
Emini pre-open market analysis
Emini daily chart
- The bears were able to get a follow-through yesterday after Friday’s big bear breakout. Bulls want to end bear streak.
- However, yesterday closed around its midpoint instead of on its low. This is a sign of weakness by the bears, and the bulls will try and end the bear streak of consecutive bear bars.
- This is a sign that the current selloff might be brief and lead to sideways.
- The bears want a breakout below the September low. They see the past three days as a three-bar bear micro channel and strong enough that there are sellers above.
- The bears still have a chance to get the downside breakout; however, if the market begins to stall here, traders will start to buy, and the market will reverse up.
- The odds still favor a trading range and sideways to up soon, unless the bears can get the downside breakout.
- If the bears get a successful breakout below the June low, the market could quickly sell off to the 2020 Pre-Pandemic high 300 points lower. While it does not seem likely, the bears have a reasonable chance of getting the downside breakout.
- Traders will pay close attention today to see if the bears can get a fourth consecutive bear bar which would be a sign of strength.
- More likely, the bears be disappointed, and today have a bull close, reminding traders that the market is in a trading range.
Emini 5-minute chart and what to expect today
- Emini is down 14 points in the overnight Globex session.
- The market sold off during the Globex session; however, it is beginning to reverse up to above the session’s midpoint.
- Today’s U.S. Session will likely have a lot of trading range price action on the open and have multiple reversals up and down.
- Most traders should consider waiting for 6-12 bars before placing a trade.
- Traders can also consider waiting for a credible stop entry, such as a double top/bottom or a wedge top/bottom.
- Traders should pay attention to the open of the day as the day will likely try and have a bull close, ending the bear streak on the daily chart.
- if the market is below the open of the day, but not far below it, traders should be open to a reversal back to the open or above it.
- Overall, traders should assume the day will have a lot of trading range price action until proven otherwise.
Yesterday’s Emini setups
Al created the SP500 Emini charts.
EURUSD Forex market trading strategies
EURUSD Forex daily chart
- The bears have four consecutive bear bars, which is good. However, the bodies are getting smaller.
- The bears are testing the September 27 bad buy signal bar, which will likely act as support.
- The market is in the buy zone; however, after four consecutive bear bars, fewer bulls will be eager to buy, which means the first reversal up will likely be minor.
- The bulls see this as a higher low major trend reversal and will likely want a micro double bottom before being convinced of higher prices. Otherwise, those bulls will want to see consecutive strong bull bars before looking to buy.
- The bears will see any rally as a pullback from the four-bar bear micro channel. They expect lower prices and a test of the September low.
- Overall, the odds favor a second leg up and a test of the October 4 bull breakout bar.
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
- Today was a small pullback bull trend that led to a midday reversal down.
- The day started with a tight bear channel that formed a parabolic wedge bottom on the open that reversed up into a bull trend.
- Typically, when you get consecutive bear bars on the open, the odds are less of a bull trend lasting all day and the day forming more of a trending trading range day or the bull trend revering at some point, like what happened today.
- The rally formed consecutive buy climaxes and tested the June 17 low.
- The bears formed a nested wedge top around bar 40, leading to an endless pullback and a downside breakout to the day’s low.
- By the close of the second big bear trend bar (11:50 PT), the market was sell the close and likely going lower.
- The market went below the early low of the day and revered up closing around the open of the day.
- Overall, today was disappointing for both the bears and the bulls. This is a sign that the daily chart is in a trading range.
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.