Trading Update: Friday March 25, 2022
Emini pre-open market analysis
Emini daily chart
- Emini bulls had a strong reversal following the L1 that was triggered on Wednesday. Bulls want strong close on weekly chart.
- The market is trying to test the February 9 high and the 4,600 considerable round number and will most likely have to reach it soon.
- The bears are hopeful that the market will form a micro double top soon and try to reverse the market and form another lower high with February 9.
- Right now, the odds favor the bulls in getting higher prices; however, if the market starts to go sideways, the probability for the bulls will quickly fall back to around 50%.
- The bears ultimately do not care if the market reverses here or back at the all-time high. They see the market as a trading range and no longer a bull trend. This means that even if the market reaches the all-time high, the bears will be eager to sell and try to form a higher high or a lower high major trend reversal and test back down to the February low.
- The bulls also got a bull breakout above the March 3 high so is a bull breakout above the neckline of a double bottom. The bulls are hopeful that the bull breakout above the neckline will reach the 4,666.25 measured move projection.
- Today is Friday, so weekly support and resistance are important, especially in the final few hours of the day.
- Right now, this week’s bar is a bull bar closing on its high. Bulls hope to keep the market around this price level and have the week finish as a strong bull bar.
- That would be two consecutive bull bars on the weekly chart, increasing the odds of higher prices.
Emini 5-minute chart and what to expect today
- Emini is up 12 points in the overnight Globex session.
- The Globex session has been in a trading range since Yesterday’s day session close.
- Traders should be open to a trading range day today, which would disappoint traders.
- Traders should expect a limit order market.
- In general, traders should only swing trade if there is a credible stop entry or a decent breakout with follow-through
Yesterday’s Emini setups
Al created the SP500 Emini charts.
EURUSD Forex market trading strategies
EURUSD Forex daily chart
- The EURUSD is still deciding between a bull breakout of the bear flag or a double top selloff back to the March low.
- Currently, the market is around the midpoint of the March trading range, which means the market is in breakout mode, and the probabilities are close to 50% for both bull and bears.
- Right now, the odds favor the bulls getting their bull breakout above the bull flag (probability is not 60%, though). This is because the market broke below a bear channel, so the market will have to test the top of the bear channel.
- While the bears have a double top with March 21 being the signal bar, it is possible that those bears may give up quickly.
- The past three days have been weak follow-through for the bears, which will likely cause more and more bears to give up. This means that there is potential for a bull breakout that reaches the March 21 high in the next few trading days.
- The bears need to get a strong bear close soon to convince traders to sell more betting on the double top.
- Overall, sideways is most likely over the next few trading days.
Summary of today’s S&P Emini futures price action and what to expect tomorrow
Al created the SP500 Emini charts.
End of day summary
- The bulls got a double bottom on the open that led to a wedge top.
- The wedge top was followed by a strong bear breakout and follow-through that led to a test of the day’s low and a beakout several points below.
- The problem the bears had was the size of the opening rally. Often when you get a reversal day, and the opening range is big, the odds will favor the reversal to lead to more trading range price action (for example, the rally from 8:00 am to 9:30.
- The bulls got an upside breakout of the bull flag around 10:00 am, leading to a high of the day.
- Overall, the market was in a trading range day with big swings up and down.
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.
On bar 24 the sell climax, Al’s said it will often reverses up in a bull channel and then test the high of the day.
Why will it test the high of the day?
The sell climax is a first leg, why it will not have a second leg down consider the heavy selling pressure?
Brad, thank you for the analysis. I have a question about selling below Bar 23, where would our profit target be? Isn’t it dangerous to be selling so low into a possible sell climax – Was there a reliable measured move target we can use for a destination if we sell below that bar?
H Trade, for what it’s worth, the low of the day retested the 4500 magic number, which was the high of March 23, and was again retested several times yesterday (failed breakouts). A magnetic point of sorts.
The wedge top at Bar 66 was a measured move from the lowest at bar 24 and the Double Bottom at the opening (bar 3)
Sybren thank you
Overall, it is consecutive sell climaxes so the odds are higher that there will be a pullback and sideways trading. It all depends on where your stop is and how you plan on managing the trade. If you can sell and be quick to exit, it is an okay trade, but most traders would be better off looking to sell a pullback.
Traders will sell 23 and exit in many ways, measured move of bar 23, 2x actual risk, arbitrary targets like 4,5,6 points. Other traders will exit at the close of bar 24 since it’s disappointing for bears.
Is it possible to have a video series from Al of a mechanical setup(s) for beginners to get started with? Like a “Forrest Gump” trade with clear entry and exit rules and anything else that may help? If not a video series, maybe an article?
While that seems like a simple request, it really is not that simple. The trading course gives you all that you are asking for.
The problem with “beginner” setups is that they do not exist. Sure, there are more straightforward trades to manage than others, which is ideal for beginners, but those trades are usually low probability trades that have great risk-reward. This means one will lose more often.
One has to realize that trading is entirely math-based, and every institution out there is using every possible edge they can get. This means that a beginner setup that is easy to be profitable setup cannot exit.
To summarize it, you have two choices for trades:
1) High probability trades
2) low probability trades
High probability trades require accurate reading of price action to recognize high probability situations. On top of that, they need more trade management than lower probability trades.
Low probability trades give you excellent risk-reward, and the trade management is easier for beginners, but the probability is lower, so one loses more frequently.
All of this is explained in the video course.
I hope this helps.
This may help you though,
it is a video course Al and Richard created that the best overall trade setups.