Emini bulls likely disappointed today

Trading Update: Thursday September 8, 2022

Emini pre-open market analysis

Emini daily chart

• The bulls had a solid finish to the day yesterday, reversing most of the September 2 selloff. The channel down is tight, so the odds favor the bulls likely disappointed today, and the market will probably not form a strong follow-through bar today.
• The market tried twice to break below the July 26 low and the July 8 breakout point and failed.
• The market is also testing the 4,000 big round number and the 50% pullback of the August rally. Some traders would have bought these two price levels and scaled in lower, confident they could exit at their original entry if disappointed.
• While yesterday was a strong bull breakout bar, the problem the bulls have is that the signal bar (September 6) is a bear bar, and there were probably sellers above the bar. This means these bears may scale in higher confidence that the market will test the September 6 high and allow those bears out breakeven at their first entry price.
• The bulls know that the bears will likely try and exit back at the September 6 high, therefore the bulls will likely try and buy the September high as well.
• The lower probability event here would be if today was a solid bull trend bar that further traps the bears without letting them out back at the September 6 high.
• It is essential to mention that the market does not have to test the September high today, and it could take several bars to reach it. I say this because the odds favor today, disappointing the bulls and giving the bears confidence they can scale in higher. Some bears might be so disappointed with yesterday that they will scale in and try to exit breakeven on the entire trade
• The bears see the selloff from August 16 as a tight channel and do not mind if the market rallies as long as the market continues to form lower highs. The problem the bears have is that the market is beginning to get strong bull closes at support, increasing the odds of more sideways.
• Overall, the market will probably continue sideways to up and eventually test the 4,100 round number and the August 24th low. Bulls bought the August 24 breakout point low during August 26. They got trapped, and some tried to scale in lower. They will try and exit breakeven on the entire trade, which would be the midpoint of their two scale in prices, or back at the August 24 low.

Emini 5-minute chart and what to expect today

• Emini is down 25 points in the overnight Globex session.
• The Globex market had been going sideways for most of the morning session but now selling off.
• Traders should expect a trading range open, a sideways market.
• As I often say, most traders should wait for 6-12 bars before placing a trade. The reason for this is that most of the time, the market will go sideways for the first hour, so there is usually no rush.
• Traders can also wait for a credible stop entry, such as a double top/bottom or wedge top/bottom.
• The essential thing on the open is to be patient. If the day is going to be an intense trend day, there will be plenty of time to enter the direction of the trend.
• Overall, traders should expect the market to disappoint the bulls today, and one way to disappoint the bulls is to have a weak bull close or even a bear close. This means traders should pay attention to the open of the day and the midpoint of the day’s range, as this will probably be a target for the bears depending on the day’s strength.
• If the day becomes a big bull bar and the market gets far away from the open, the bears will try and close today under the midpoint of the day’s range. The bull wants the opposite.

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 EURUSD had a strong bull close yesterday, just under the 20-period moving average.
• While yesterday’s bull close is strong and a good finish for the bulls, traders typically do not like to buy just under the moving average, therefore some traders may hesitate to buy here and look to buy a pullback, or buy after the market has a strong close above the moving average.
• It is reasonable for bears to exit here, as yesterday is a second failed breakout of the July 14 low and the 1.000 big round number.
• Traders will pay attention to the follow-through today. The bulls have an opportunity to create a strong bull close today, and if they do, that will increase the odds that this will be the rally that tests the August 10 high.
• More likely, the market will disappoint the bulls, go sideways for a few bars, and confuse traders.
• Also, it is essential to mention that the bulls are getting a decent amount of buying pressure over the past 12 bars, which increases the odds of higher prices.

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 buy climax that led to a bear trap, then a trading range.
• The market began to buy the close on bar 3, leading to consecutive wedge tops.
• The market reversed after the second wedge top (around 8:30 PT). However, the bears got a bear breakout below the wedge bull flag at 9:45 PT.
• The big bear breakout bar around 9:00 PT was strong enough to make the market Always In Short and favor at least a second leg down. Note, the second leg down was the bar after the inside bar four bars later (low of selloff).
• The 9:15 PT selloff was a test of the open of the day and high of bar 1 and test of the 7:15r PT bottom of the bull channel.
• The 9:15 selloff ended up being a second leg trap, and the market tested the 8:50 breakout point of the wedge bull flag.
• The market went sideways for the rest of the day and ultimately closed at the high of the day.
• Overall, today was good for the bulls on the daily chart, and now the bulls have two bull bars closing on their highs, increasing the odds of sideways to up.
• The bears want tomorrow to close on its low, which would be a Low 2, with September 2nd being the Low 1 signal bar.  The bulls want the opposite, and tomorrow to be another strong bull bar.
• Tomorrow is Friday, so the weekly chart is essential. The bulls want the week to close on its high, and the bears want to paint a big tail on top.
• More short End-of Day summary videos to follow starting next week.

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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