Trading Update: Monday October 23, 2023
S&P Emini pre-open market analysis
Emini daily chart
- The Emini sold off, closing below the October 6th low. This is a sign of strong selling and the trapped bull using any bounce to sell out of losing longs. This increases the probability that the first reveal up will fail.
- The bears hope that the recent downside momentum is strong enough to lead to a test down to the year’s open.
- There will likely be resistance near 4,178, which is the midpoint of the rally that began in October 2022.
- The bulls want the market to form a wedge bottom with August 18th and October 6th. If the bulls are going to get a reversal up, they will need to halt the selling pressure. They can create strong bull closes or make the market go sideways.
- The overall Emini is near the middle of the broad trading range on the weekly chart. This means the market can fall much lower before bulls begin to buy.
- Overall, traders will expect the bears to get another leg down after the past three big bear trend bars. Traders should wait and see what the second leg down looks like before buying. The bulls will try and prevent the bears from getting more follow-through selling today.
Emini 5-minute chart and what to expect today
- Emini is down 15 points in the overnight Globex session.
- Traders should assume that today will have a lot of trading range price action on the open. In general, there is an 80% chance of a trading range open and only a 20% chance of a trend from the open.
- Because of the recent selling pressure on the daily chart, today will probably disappoint the bears and be either a weak bear bar or forming a bull bar.
- Traders should pay attention to the day’s open and last Friday’s low, as both will probably be important magnets.
- Most traders should try and catch the opening swing that often begins before the end of the second hour. It is typical for the opening swing to start after the formation of a double top/bottom or a wedge top/bottom. This means traders can often wait for one of the abovementioned patterns to develop before placing a trade.
- Lastly, traders must remember to be patient. If a setup does not look right, ignore it and wait for more clarity. There are 81 bars to the day, which is plenty of time for a trader to find a few reasonable trades.
Emini intraday market update
- The Emini gapped down and reversed up after the first three bars of the day.
- Bar 4 was a big bull reversal bar and a large enough surprise that the odds favored higher prices and a measured move up of the opening range.
- Because of the daily chart testing major support, the October 6th low, today had the potential to become a strong bull trend day.
- The bulls recently formed a buy climax at bar 42 which will likely lead to sideways trading and a pause in the trend.
Yesterday’s Emini setups
Richard created the SP500 Emini chart (Al on leave).
EURUSD Forex market trading strategies
EURUSD Forex daily chart
- The EURUSD formed a small bull close above the moving average last Friday.
- The bulls are hopeful this is the start of an upside breakout, however, the market has not clearly broken out above the tight trading range.
- Until there is a clear breakout, there is no breakout. This means that traders should wait for confirmation if the bull breakout will succeed or fail.
- The bears will try to cause any bull breakout above the moving average to fail and reverse back down.
- The market is in a tight triangle, which is a neutral market. This means that traders should assume that the probability for both the bulls and the bears is close to 50%.
- Overall, traders should wait and see the breakout before placing a trade.
Summary of today’s S&P Emini price action
Al created the SP500 Emini chart.
End of day video review
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.