Trading Update: Wednesday March 2, 2022
Emini pre-open market analysis
Emini daily chart
- Bear bar yesterday so Emini High 1 pullback in late February lower low major trend reversal.
- Yesterday was bear bar and therefore low probability High 1 buy signal bar.
- The pullback might retrace half of the 3-day rally and test the January 24 low.
- There is almost a 50% chance of a new low. But there will probably be buyers below the January low after so many big bull bars closing near their highs since the January 24 low.
- If there is a new low, there should be a reversal up from a wedge bottom with the January 24 and February 24 lows.
- There is a 40% chance that the bear trend will fall below the 4,000 Big Round Number and fill the gap above the March 2021 high on the monthly chart.
- While the Emini probably has seen the low for the next several months, the bull trend might not be resuming. The reversal up might simply continue the 8-month trading range. For example, it might form a double top with the February 2 high.
- I have been saying for several months that the correction would probably have 2 bear bars on the monthly chart, but it could have 3. February was the 2nd bear bar.
- The reversals up on the weekly and daily charts both look like they should continue. However, last week’s rally was so big that many traders want to see at least a 50% retracement before buying. They want a pullback so that their risk will be smaller.
Emini 5-minute chart and what to expect today
- Emini is up 10 points in the overnight Globex session.
- Yesterday ended with an expanding triangle. The bulls hope it is the end of the 3-day trading range. They want a strong breakout above the triangle and the 60-minute EMA. If there is a series of big bull bars early today, today could be a big bull day. However, after 3 sideways days, the odds favor more sideways.
- Traders are deciding if the wedge bottom is in and a reversal up is underway. If it is, there should soon be a series of bull trend days.
- The bears want at least one more new low below the February 24 low. There is a lot of room to that low. They could get one or two big bear days, but still fail to break below that low. Therefore, a bear breakout below the 3-day range will be less convincing than a bull breakout.
- However, if there is a series a of big bear bars early today, traders will look for a bear trend day.
- More likely, today will be mostly sideways, like yesterday.
Yesterday’s Emini setups
EURUSD Forex market trading strategies
EURUSD Forex daily chart
- Stalling at the January 28 low. The bears want a successful breakout and then a 400-pip measured move down to near last year’s low.
- They need consecutive bear bars closing below the January 28 low before traders will believe that a successful breakout has begun. Closes far below would be more convincing.
- Yesterday was a big bear day, but its close was 2 pips above that low.
- While that might seem insignificant, it is important. That means if today closes below the January 24 low, there would be consecutive bear days breaking below the low, but only one close below the low. Many traders will buy the close, betting that tomorrow will reverse up from a failed breakout attempt.
- The bulls need a strong reversal up within the next week or so. They then want a breakout above the February 10 high and a 400-pip measured move up.
- When there is both a double top and a double bottom like there is now (January 14/February 10 and January 28/today), the chart is in Breakout Mode. That means there is about a 50% chance of a successful bull breakout and about a 50% chance of a successful bear breakout.
- The bulls have been trying for several days to get a reversal up but have been failing. Therefore, the odds of a bear breakout are slightly higher.
- However, one or two big bull days would make a successful bull breakout slightly more likely. I say “slightly” because it is accurate. Until there is a successful breakout, the probability is never much more than 50%, even though it might appear that it is.
Summary of today’s S&P Emini futures price action and what to expect tomorrow
End of day summary
- The Emini opened with a trading range. After a double bottom at the moving average, it rallied in a weak Small Pullback Bull Trend for most of the day.
- The day was also a Spike and Channel bull trend.
- Although the Emini trended up, it was in tight trading ranges for most of the day.
- I have been saying that it would get back above last week’s high and it did. However, it then spent 4hours oscillating around that high.
- Today was a bull day on the daily chart.
- There is at least a 50% chance that last week will be the low of the next several months and possibly the low for the remainder of the year.
- But it has been in a trading range for 8 months, and it could continue sideways for many more months.
- While the selloff may have ended. the rally might be a bull leg in the 8-month trading range.
- Even if it is, the reversal up has been strong enough for traders to expect higher prices. However, it might have to test lower before it goes higher. For example, it might test the January 24 low again.
- This week is the entry bar for a High 2 buy signal on the weekly chart. There are 2 trading days left to the week. The bulls want the week to close on its high and have a big bull body. That would increase the chance of higher prices next week.
- At a minimum, they want a bull body and a close above last week’s high.
- The bears want the week to close near its low. It would then be a Low 1 sell signal bar in a bear channel that began on January 4.
- But, as I said above, there probably would be buyers above the January 24 low.
See the weekly update for a discussion of the price action on the weekly chart and for what to expect going into next week.
Traders can see the end of the day bar-by-bar price action report by signing up for free at BrooksPriceAction.com. I talk 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 I mention time, 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.