Trading Update: Tuesday May 10, 2022
Emini pre-open market analysis
Emini daily chart
- Emini close below 4,000 for the first time in over a year.
- Bears hope this will lead to a successful bear breakout and measured move down from the February – March trading range, which would test the 3,600-price level.
- The market has had a 16% correction which is in the zone where value investors will begin to buy. An important thing to keep in mind is that value investors will be happy to buy a 20% or even 25% correction. They will see any price below as an excellent opportunity to buy at a deep discount, so there is potential for the market to go lower.
- The bulls want today to disappoint bears by making today close as a bull bar. This would increase the odds that the market will bounce here.
- The bears will try hard to get another big bear trend bar today. However, they will probably fail.
- Overall, the market is at obvious support 4,000 considerable big round number. That price level will likely act as a magnet, and there will probably be buyers at this price level, confident the market will get back to 4,000 if the market falls lower.
Emini 5-minute chart and what to expect today
- Emini is up 50 points in the overnight Globex session.
- The Globex market has been in a bull trend since last night.
- Bulls want today to close as a bull bar closing on its high, which would disappoint the bears and increase the odds that the market gets a bounce here.
- The bulls hope they can completely reverse yesterday’s bear trend bar. Today will likely not close on its high and will be disappointing for both bulls and bears.
- Traders should be open to the possibility of a bull trend from the open, but as usual, expect some form of a trading range open.
- As always, most traders should wait for a strong breakout with follow-through or a credible stop entry to buy.
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 bulls have an ii pattern on the daily chart, which is a triangle on a smaller time frame.
- This is a breakout mode pattern and may be a final flag if the market makes a new low.
- The bulls see this as a failed Low 2 (or a double bottom), and the bulls want a breakout above the neckline of May 5 and a measured move up, which would take the market back to the lows in March and April.
- The bears want any breakout test of May 5 to fail and lead to more down and for the market to ultimately reach the 2017 lows.
- More likely, the bear breakout below the broad bear channel will fail, and the market will have to test the top of the bear channel, which would be above the March 2022 high.
- Overall, the bulls have the potential to get an upside breakout in the next day or so.
Summary of today’s S&P Emini futures price action and what to expect tomorrow
- Al will post chart after the close.
Al created the SP500 Emini charts.
End of day summary
- The market gapped up on the open and had consecutive sell climaxes down to around 8:30 PT.
- The market formed consecutive wedge bottoms during the selloff to 8:30 PT.
- When there are two bottom attempts in the form of consecutive sell climaxes, it increases the odds of a trading range forming.
- The bulls were able to get strong buying pressure during 8:30 – 10:30 PT, increasing the odds of an upside breakout and a successful major trend reversal rally.
- The bulls broke out to the upside during 10:30 PT, and the market clearly became always in long. The problem the bulls had here was the sell-off was so large that the best the bulls could hope for was a test back into the opening range (first 10 bars) or the open of the day.
- When the market has a lot of trading range price action (big swings up and down), traders do not want to buy too high, so the market went sideways to down from 11:00 PT to the close.
- Overall, the bears got a follow-through bar below the May 2 close. While this is good for the bears, it is overlapping yesterday’s bar which is a sign of trading range price action.
- The bulls may need a micro double bottom before getting a reversal.
See the weekly update for a discussion of the price action on the weekly chart and for what to expect going into next week.
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.
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.
