Trading Update: Monday March 6, 2023
Emini pre-open market analysis
Emini daily chart
- The Emini had two strong bull trend bars last Thursday and Friday, which is strong enough to expect a likely 2nd leg up.
- This means that traders will expect the first reversal to fail.
- The selloff from February 14th was in a tight bear channel. However, it was within a trading range which lowered the probability of it leading to a successful bear breakout.
- The market broke below the February 10th bottom of the bull flag, a pullback. The bulls saw the selloff from February 2nd to the February 10th low as the bull flag.
- Bulls were buying below the February 10th low expecting the breakout to fail, which led to a test of the February 2nd high, and they got trapped during the selloff down to February 24th.
- Some of the bulls who got trapped buying February 10th scaled in lower above a bar like February 24th or March 2nd. Other bulls would take the loss during the February 22nd follow-through bar and look to re-establish their long positions above a bull bar (February 24th or March 2nd).
- March 2nd is a very important bull trend bar. Bears hoped the downside breakout would form a small pullback bear trend and trap the scale in bulls who bought below February 10th. However, after March 2nd, traders concluded that the market was in a trading range.
- Trading ranges close breakout points which means that after March 2nd, the probability favored a rally back to the February 10th breakout point low to allow the scale in bulls out.
- The bears should not have allowed the past two bull trend bars on the daily chart. This means the bears are not as strong as they could be, and they will likely step aside for a few bars expecting a likely 2nd leg up.
- The bulls can show strong buying pressure by getting above the February 2nd high. They need to collect more trend bars and get consecutive closes above the moving average.
- Overall, traders should expect the bulls to get a second leg up and for the downside, to be limited over the next couple of days. The bulls are trapped out of a good trade (being long), and the bears are trapped into a bad trade (Short during a strong breakout). Both will probably use and pullback to buy, expecting a 2nd leg up.
Emini 5-minute chart and what to expect today
- Emini is up 8 points in the overnight Globex session.
- The Globex market has been sideways in a trading range since Sunday’s evening session open. The bulls recently got an upside breakout and went above Sunday’s Globex high.
- The 15-minute Globex Chart is beginning to form much selling pressure.
- The bulls have an 8-bar bull micro channel to a new high, with 7 out of 8 bars being bull bars. This is a sign of strong buying that will probably lead to a second leg up.
- The problem the bulls have is that it is at the top of a trading range, increasing the odds of more sideways trading.
- Traders should expect the open to have a lot of trading range trading. This means the odds will favor failed breakouts and limit order trading on the open.
- Most traders should look for a swing trade to develop before the end of the 2nd hour. Waiting for one of the abovementioned patterns allows a trader to enter a swing trade with strong math. This means a trader can enter on a stop entry expecting two legs and ard at least two times their risk. A common pattern is a double top/bottom or a wedge top/bottom.
Emini intraday market update
- The Emini has had more than 127 closes above the moving average since last Thursday. (Note: This is regarding the 20 -Period Exponential Moving Average plotted on the RTH/Day Only Chart).
- This is extreme buying pressure and is not sustainable, which means the odds are the market will transition into a trading range soon and close below the moving average.
- As of bar 15 (7:45 AM PT), the market has formed a credible parabolic wedge top and a possible high of the day.
- Traders should be open to a possible opening reversal and formation of a trading range and also a possible test of the open of the day.
- Currently, the selloff down to bar 18 (8:00 AM PT) is strong enough for a second leg down.
Friday’s Emini setups
Al created the SP500 Emini charts.
EURUSD Forex market trading strategies
EURUSD Forex daily chart
- The EURUSD may get a bull breakout of a bear flag over the next few days, and a measured move up (blue line).
- The bears have a Low 2 short below March 2nd. However, it failed to trigger. In general, Low 2 shorts are second-entry shorts and reasonable trades. However, this context is different because it forces traders to sell at the bottom of a likely trading range. This will increase the probability of buyers below.
- It is common to get bull breakouts of bear flags at the bottom of trading ranges and bear breakouts of bull flags at the top.
- The bears likely need a lower high major trend reversal if they are going to get the market to go much lower. This means that the bears do nigh mind a rally if it is not too strong and leads to a lower higher.
- The bulls want a strong bull breakout over the next few days and a rally above the February high.
- The bulls have a credible argument for a strong breakout. While they will likely be disappointed and the market will continue sideways.
- The bulls see the rally up to the February high as being in a tight bear channel. The weekly chart sold off near the buy zone, where traders will begin to buy and scale in lower, hoping for a major trend reversal.
- The problem the bulls have is that the selloff down to the February low is tight and will likely lead to more sideways trading instead of straight up.
- Overall, traders will pay close attention to the entry bar today following Friday’s stop entry buy. The bulls want a big entry bar closing above March 1st, and the bears want to disappoint the bulls.
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
- Live stream video trial replacement of end of day review coming soon.
See the weekly update for a discussion of the price action on the weekly chart and for what to expect going into next week.
Al Brooks and other presenters talk about the detailed Emini price action real-time each day in the BrooksPriceAction.com trading room days. We offer a 2 day free trial.
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.
it often seems like a “sell set up” is created by the computers only to dupe shorts and subsequently run their stops
Absolutely. Computers are programmed to do what “Masters of the Universe” have been doing for decades, just now at the speed of light. Be careful!
Thank you and Al!