Trading Update: Wednesday August 10, 2022
Emini pre-open market analysis
Emini daily chart
- Update after 5:30 AM PT report: The bulls got a strong close above the August 8th high and June 2 high. Bulls want close above June high today.
- The Emini tested the June 2nd high two days ago, forming a bear bar closing near its low for a wedge top (Aug 1, 3, and 8),
- At the moment, the odds are the market will correct for a couple of legs down; however, traders do not know if the market will try and hold above the June 2nd high before correcting down.
- The bear’s target is the 4,0000 big round number which is also the breakout point from the July 22 high.
- The bull will see any selloff as a pullback from the rally and will try its best to get the upside breakout above the June 2nd high. Next, the bulls would want a breakout above the neckline of the June 2nd high and a measured move up from the double bottom (June 17th). The breakout and a measured move would take the market up to the March 29 high.
- Bears want the opposite. They want the market to form a double top with the June 2nd high, test the neckline (June 17), break below it, and go for a measured move 500 points below the June 17 low, which is unlikely.
- More likely, the market will go sideways and continue the trading range price action. Since the market is likely in a trading range, this means a test of the middle of the range and prior breakout point highs (July 22) are likely to get tested.
- While the bears have a good signal bar on August 8th, they need to do more to convince traders that the market is always in short.
Emini 5-minute chart and what to expect today
- Emini is up 65 points in the overnight Globex session.
- The market had a strong upside breakout on 5:35 AM PT on CPI report.
- This will result in large gap up on the open.
- The bulls will try their best to get today to close about the June 2nd high, and the bears want to have today sell off as much as possible and damage the strong rally up from 5:30 AM PT.
- Traders should pay attention to the first few bars of the day. If they are consecutive strong trend bars, traders will consider entering in the direction of the trend. If the bars are sideways with lots of overlap, traders will assume more trading range will follow.
- The market will gap far above the moving average. This means the market will likely have to pullback and get closer to the moving average, or rallying on the open will probably not last long and will be unsustainable.
- Overall, traders should be patient on the open. The market often goes sideways for the first 6-12 bars, so there is usually no rush to enter the open.
- Traders can consider waiting for a double bottom/top, wedge bottom/top, or a strong breakout with follow-through.
- Again, if there is a bull breakout on the open, traders should be mindful of how far the market may be away from the moving average. The single highest probability outcome in a day is a touch of the moving average therefore, traders should be aware that the market will reach the moving average today. The point is that if the market rallies on the open, it may not last long, and the market will have to test the moving average.
- Lastly, traders should pay attention to the June 2nd high as it will likely be an important magnet today.
Yesterday’s Emini setups
Al created the SP500 Emini charts.
EURUSD Forex market trading strategies
EURUSD Forex daily chart
- The EURUSD broke to the upside after the 5:35 AM PT report. At the moment, it looks like the current bull breakout of the triangle will be successful.
- The bulls have reached the 2017 low, and the market is currently testing the May to June trading range lows.
- Traders will pay close attention to see if the bulls can close the current bar on its high. Next, can the bulls get a strong follow-through bar, increasing the odds of higher prices?
- Overall, this is good for the bulls and increases the odds of higher prices and a test of the July high and the June 27 high. Both of these targets are in the middle of the May to June trading range, another magnet for the bulls.
Summary of today’s S&P Emini futures price action and what to expect tomorrow
Al created the SP500 Emini charts.
End of day video review
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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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.
Can I ask why bar 19 & 23 are not buy signals? I thought there would be a small pullback bull trend.
I think because 19 was a climax. In that moment we had 8 bars on micro channel. When 19 closed i think we maybe have a two possibilities: first possible that was a climax, and the second maybe a measuring gap, but odds are that be a climax, because we had consecutives climax on rally: 12/13, 15, and now 19, the biggest bull bar. The FT (bar 20) also dont be good and probably was a climax.
The 23 was not a good buy because after a buy clímax usually we have ten bars two legs sideways to down, in this case bulls wait for a big correction to buy again, also after three bears bars (in this case one with big bear body) odds are bears buy above the first bull bar and make a small second leg down.
Filipe great answer. Did you mean to say bears sell above first bull bar?
Thank you, Andrew. I did the best I could.
In the context on bar 18, odds are bear will sell the first bull bar or when price above prior bar after three bears bar. But remember: Odds are mean 60% probability and not 90%…
I think this same is true after bar 13 from today (11/08/22 on Emini). Bears and Bull sold. In this context I think that because bulls who buy trend BTC 7 – 10 was disappointed by 11 and 12 and try to get out on breakeven or small loss.
Another example is bar 14 from 05/08/22, but in this example bear sold aggressively on this close and the price didnt above 14.
Another example can be bar 22 from 08/02/22, in this case bear sold above prior bar and market do another small second leg: bar 23.
In the context on bar **23**…