Trading Update: Friday August 4, 2023
S&P Emini pre-open market analysis
Emini daily chart
- The Emini rallied yesterday following a gap down. However, the market closes below the moving average (blue line) for the first time in over 40 bars.
- The market is testing the June breakout point high and 4,500. Both of these price levels will probably act as support.
- The bears are hopeful that yesterday’s weak bull close is a pullback that will lead to lower prices.
- The Bulls see yesterday as a 2nd leg trap. Next, they are hopeful that today will have a strong bull entry bar closing above the moving average.
- The bears have not yet done enough to make the market Always In Short. This means the bears probably need at least 1-2 more bear bars closing on their lows.
- It is common for pullbacks in rallies to almost become Always In Short and reverse up.
- The selloff over the past four days is strong enough that the first reversal up will probably fail. This means traders should expect sideways trading over the next few trading days.
- Overall, traders will pay attention to what kind of follow-through the bears will get below the moving average. At the moment, the odds favor a reversal up and bears becoming disappointed.
Emini 5-minute chart and what to expect today
- Emini is up 17 points in the overnight Globex session.
- The overnight Globex market rallied last night and is returning to yesterday’s close.
- Traders should expect the open to have a lot of trading range price action for the first hour of the U.S. Session.
- As I often say, most traders should consider not trading the first 6-12 bars unless they are comfortable with limit orders, wide stops, and scaling in.
- There is often a 50% chance that the initial breakout on the open reverses directions. This exposes traders to getting trapped on a breakout that reverses directions, causing the trader to take a big loss. By waiting for 6-12 bars, a trader will gain certainty on the day’s structure and catch the day’s high or low.
- Most traders should focus on catching the opening swing that often begins before the end of the second hour after forming a double top/bottom or a wedge top/bottom.
- Today is Friday, so weekly support or resistance is important. Traders should be ready for a surprise breakout up or down late in the day as traders decide to close the weekly chart.
- Trader should pay attention to yesterday’s close. If bears are disappointed enough, they may buy back shorts and bulls buying, causing a test of yesterday’s high.
Emini intraday market update
- The Emini formed a large bull trend bar on bar 1. However, the bulls failed, and the market reversed down for 4 bars.
- The bears tried to form a bear trend. However, the odds favored a selling climax and vacuum test of support on bar 8.
- Bar 1 was too strong, increasing the odds of a Trading range day, not a bear trend day.
- The Bulls got a strong reversal up on bars 11 and 12. However, the upside was likely limited after the selloff to bar 9. This increased the odds of sellers above bar 3.
- The bulls formed a small pullback trend lasting until around bar 40, when the bulls lost control, and the bears formed an endless pullback.
- As of bar 55, the market has sold off back to the low of the day. The bears want the downside breakout, and the bulls want the market to fail around the same price as bar 8.
Yesterday’s Emini setups
Al created the SP500 Emini charts.
EURUSD Forex market trading strategies
EURUSD Forex daily chart
- The EURUSD is developing buying pressure, following a tight bear channel down to the August low.
- The market is testing near the July 6th buy signal bar high. This will probably act as support due to the signal bar (July 6th) leading to a strong rally.
- The channel down to the August low is in a tight bear channel. This means the first reversal will probably fail and lead to a minor reversal.
- The bulls need to show more signs of strength. First, they need to get consecutive bull closes. Ideally, the Bulls need to get a strong reversal bar closing above the past 2-3 bars.
- Overall, traders should expect the market to go sideways over the next few days.
Summary of today’s S&P Emini price action
Al created the SP500 Emini charts.
End of day video review
Here is YouTube link if video popup blocked:
See the weekly update for a discussion of the price action on the weekly chart and for what to expect going into next week.
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.