Emini Bulls Trying for Consecutive Strong Closes

Trading Update: Tuesday October 4, 2022

Emini pre-open market analysis

Emini daily chart

• The bulls got a close above Friday’s high yesterday, and they want consecutive strong closes today.
• Bulls are trying to prevent the successful bear breakout below the June low.
• Right now, the odds favor a rally and a test back to the 4,000 and middle of the 7-month trading range. It is possible that the market has to go sideways for several bars before it can go much higher.
• The bears will try and get some bear flag and successful breakout far below the June low and a 350-point selloff down to the 2020 Pre-Pandemic highs.
• The channel down to the September low is tight, which means the bulls have much work to do to reverse the selloff. They need to develop more buying pressure in the form of a few strong bull breakout bars or several bull bars closing above their midpoints.
• Traders will pay close attention today to see if the bulls can get a follow-through bar after yesterday’s bull close. This would be a sign of increasing buying pressure. However, even if the bulls get a strong bull close today, they will likely need to do more to get the reversal up.

Emini 5-minute chart and what to expect today

• Emini is up 50 points in the overnight Globex session.
• The Globex market had a strong rally during the overnight session.
• The market will have a big gap up.
• While large gaps increase the odds of follow-through buying at some point in the first couple of hours, the market may have to reach the moving average first.
• Traders should assume a trading range open and test the moving average. While large gap days can have strong moves on the open, they are usually brief and do not last long before going sideways.
• The market will likely be far from the moving average, which is the fair price. On the open, traders will likely be suspect of buying too far from the moving average (fair price), which means we may have to pull back to it soon.
• As always, traders should assume limit orders and consider not trading the first 6-12 bars of the day.
• Also, a trader can wait for a credible strop entry such as a double bottom/top or a wedge bottom/top.
• Lastly, remember that one must not be in denial and that price is truth. If the market is getting consecutive strong trend bars, traders must consider that the day could be a strong trend day.
• Also, with the day likely having a big gap, traders should be mindful of the size of the bars because the risk could be bigger, so traders must trade smaller.

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 are getting a solid reversal following the bear breakout below the September 6 trading range low.
• The bulls have closed the breakout point gap (September 6 low), and the bulls see this as a reversal from a final Flag (blue box).
• The first target for the bulls is the September 20 high followed by the September 12 high.
• At the moment, the market is always in long with the 5-bar bull micro channel, and the odds favor a second leg up.
• It is possible the low for the rest of the year is in.
• The bears want another lower high here. They do not care where the lower high is below the September 20 high and especially below the September 12 major lower high.
• the bulls have a chance to get a strong reversal up here, and they need to capitalize on it.
• Today will be important for the bulls. The bulls had a strong breakout bar yesterday, and they have the chance to get a strong follow-through bar today as well.
• Even if the bears get a bear close today, the odds still favor higher prices, but it will be a subtle sign of disappointment and trading range price action.
• Overall, the market has been in a bear trend since the middle of 2021. The odds favor a rally leasing several months and a large trading range forming on the daily chart.

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 bull trend from the open that evolved into a trading range day.
• The market clearly became always in long on the first two bars and was a buy-the-close market that led to a 10-bar bull microchannel.
• The bulls formed a parabolic wedge that led to several hours of trading range price action.
• The market formed a lower high and sold off, testing the bar 2 close later in the day.
• The market rallied sideways for the rest of the day and ultimately closed near its high.
• Overall, today was a strong close on the daily chart for the bulls. The past two trading days will likely lead to a second leg up on the daily chart.  

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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