Trading Update: Thursday October 5, 2023
S&P Emini pre-open market analysis
Emini daily chart
- The Emini reversed up, forming a solid bull reversal bar on the daily chart.
- The bears broke below the September 27th low. However, they failed to get a strong bear close, and the market reversed today.
- Because of the bad follow-through after the September 29th bear breakout, the odds favored the bears betting bad follow-through selling after the October 3rd.
- The bulls hope that yesterday’s bull reversal bar will lead to a strong reversal up on the daily chart.
- The bulls will see the selloff from the July high as a large two-legged pullback. One could also call it a large high 4 pullback.
- While the bulls have a strong bull reversal bar, they need follow-through buying to convince traders that the market is Always In Long.
- More likely, any rally the bulls get will be disappointing for the bulls.
- It is important to realize that if the bulls get a strong reversal tomorrow, it could quickly test the August 18th low, where bulls got trapped.
- It is reasonable for the bears to exit above yesterday’s high and wait to see what the bulls can do. This means that tomorrow can become another bull trend day or gap up during the overnight hours.
- More likely, tomorrow will be a disappointment bar and fail to become a strong entry bar for the bulls closing on their high.
Emini 5-minute chart and what to expect today
- Note: I am traveling to Europe today, and due to the time zone difference, I may be unable to type a complete premarket discussion for the rest of this week and next. I will do my best to get something released daily.
- Traders should pay close attention to yesterday’s high as the bulls will try their best to get a reversal up and a close far above yesterday’s high.
- The bears want the opposite to prevent the bulls from closing above yesterday’s high.
- Yesterday, we had a climactic rally into the close. This increases the odds of (75% chance) of a trading range open tomorrow, lasting at least two hours and beginning before the end of the second hour.
- Since yesterday entered a trading range in the final thirty minutes of the session, it is possible that Today’s open continues the sideways trading. This would mean that the market would not have to go sideways for two hours on the open due to the sideways trading beginning before the end of yesterday’s session.
- As always, traders should assume an 80% chance of a trading range open and only a 20% chance of a trend from the open.
- Most traders should consider not trading the first 6-12 bars unless they are comfortable with limit order trading. Instead, they should focus on stopping entries and catching the opening swing trade.
- It is common for the opening swing to begin before the end of the second hour and after forming a double top/bottom or a wedge top/bottom.
- Lastly, no matter what a trader believes will happen going into the U.S. Session, they must never deny the price action in front of them. Price is truth; a trader must trade the chart before them, not what they hope will happen.
Yesterday’s Emini setups
Al created the SP500 Emini charts.
EURUSD Forex market trading strategies
EURUSD Forex daily chart
- The bulls formed a strong reversal yesterday after the bears failed to break below the September 27th high.
- The bears got a downside breakout on October 2nd below a Low 1 short that was formed on the prior day.
- While the October 2nd bear breakout was a surprise, the odds favored buyers below the September 27th low.
- The selloff that began in July this past year is getting climactic, increasing the odds of a trading range forming soon.
- The bears have kept the market away from the moving average for over 20 bars, another sign of climactic behavior. This increases the odds of a test of the moving average soon, and the difficulty of the moving average may be already underway.
- Overall, the market will probably reach the October 2nd Low 1 short and allow the trapped bulls to make money.
Summary of today’s S&P Emini price action
Al created the SP500 Emini charts.
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.