Trading Update: Tuesday April 12, 2022
Emini pre-open market analysis
Emini daily chart
- Emini likely bull close today despite bears closing gap from the March 3 breakout point, which increases the odds for more trading range price action.
- The bears had a big bear breakout bar yesterday.
- The bears will want to try and get strong follow-through today, which would increase the odds of getting a measured move down from the March 28 high to the April 7 low (breakout point). This measured move projection would take the market back down to the March 15 bull signal bar high.
- Bulls want a strong buy signal bar today, which would create a wedge bull flag (April 1, April 7), and if the bull bar is strong, it may be enough for the bulls to buy for a test back to the March 29 high. Yesterday’s bear bar is a surprise bar, so that the odds will favor at least a small second leg down. Also, the bear channel from the March 29 high is tight, which increases the odds of any reversal down being minor.
- Today will likely have a bull close, confusing traders and disappointing the bears. When the market looks like it is in an overall trading range, it is essential to constantly be thinking about what would disappoint the bulls and bears, especially after one side does something strong, like the bears getting a strong bear close yesterday. If today is a strong bear bar, that will signify that the market cycle may be changing.
- Ultimately, the bears are hopeful the selloff from March 29 is an endless pullback that will lead to a test of the February low and a bear breakout. The bulls expect a second leg up from the rally up to March 29 and know the deep pullbacks are a part of trading ranges.
- The bulls need a strong signal bar today. If they get anything less than a strong bull close, most bulls will wait for a micro double bottom or a strong upside breakout.
Emini 5-minute chart and what to expect today
- Emini is up 40 points in the overnight Globex session.
- The bulls got a major trend reversal setup around 1:00 AM PT, leading to a strong bull trend.
- The odds slightly favor a bull close today, and the bears are getting disappointed after yesterday’s bear close. This means traders will look for bear selloffs to fail.
- Just because the odds slightly favor a bull close today does not mean traders should not be open to the possibility of a bear close today. While it is not likely, the risk is real that the bears get a second bear close or strong bear close.
- As always, most traders should consider waiting for a credible stop entry such as a double bottom/top, a wedge bottom/top, or a strong breakout with follow-through.
- If traders often take losses on the open, they should consider not trading for the first 6-12 bars since the open usually has multiple reversals.
Intra Day Update
- The market opened with four consecutive bull bars, but the bears sold off with four consecutive bear bars.
- Big up, big down, so traders should expect trading range price action as the bulls and bears fight over a channel up or down.
- Right now, the market is always in long with the four consecutive bull bars on the open, and the bears have not done enough to make the market Always In short.
- Traders should be mindful that the day will likely close above today’s open.
Yesterday’s Emini setups
Al created the SP500 Emini charts.
EURUSD Forex market trading strategies
EURUSD Forex daily chart
- The bear triggered yesterday’s low 1 short.
- Currently, the bears have eight consecutive bear bars, and the odds do not favor nine bars. This means today will likely have a bull close.
- While the bears are strong, look back and find a time when there were nine consecutive trend bars in a row. This behavior is not typical and is climactic.
- At this moment, the bears are testing the March 7 bear close again. While it doesn’t look likely, today’s bar could look very different (a bull bar) when it closes.
- The odds favor more buyers at this price level, at least for a day or two. The bears are likely exhausted and will need a day or two.
- While the odds favor the trading range continuing, the bears are doing an excellent job with selling pressure. If the bulls get a strong second entry to buy here, the number of bear bars will lower the probability of the bulls.
- Traders have to remember that the market is at the bottom of a trading range and had a failed bear breakout of a bear channel. This means that odds favor a test of the top of the bear trendline above. This increases the odds of any bear breakout below March failing and the March – April trading range acting as a final flag.
- Overall, traders should look for a bull reversal setup or strong bull breakout during the intraday price action since the odds favor a bull close today.
Summary of today’s S&P Emini futures price action and what to expect tomorrow
Al created the SP500 Emini charts.
End of day summary
- The market opened with a gap up and then had a parabolic wedge reversal by 7:00 PT.
- The bears got an endless pullback to the open of the day in the form of a bear channel which increased the odds of the first reversal up to being minor around 7:45 PT.
- The bulls got a credible second entry to buy with follow-through with four more bull bars up to around 8:40 PT. However, it formed a lower high major trend reversal that led to a bear trend for the rest of the day.
- The bulls tried to form a wedge bottom around 9:45 PT; however, the third leg down to 9:45 PT was tight, which lowered the odds of a successful wedge bottom. The bulls tried several times to get the wedge bottom; however, they gave up around 10:20 PT, and the bears got the breakout and measured move down from the failed wedge bottom.
- The bears ended up getting a strong enough bear breakout below the wedge bottom, leading to three more pushes down to 12:30 PT and sideways into the close.
- Overall, today was an excellent example of a trading range that keeps forming lower highs and lower lows, which leads to a bear breakout late in the day. These days can be challenging because when one sees the bear breakout around 10:50, it is hard to get short because of all the prior trading range price action.
- Today was a good close for the bears on the daily chart. The bears hope today and yesterday will lead to a possible bear breakout below a bear bull flag on the daily.
- Trading range price action on the daily chart, so traders should expect disappointment and a bull close tomorrow.
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. 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.
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.
_As always, most traders should consider waiting for a credible stop entry such as a double bottom/top, a wedge bottom/top, or a strong breakout with follow-through._
Very good advice considering recent market volatility.
Thanks again Brad for the after-analysis! From your experience, what is the chance of bottom wedges failing, repeatedly, in a day like on 12th April (in particular around 9:30, 10:20 and 11:30 PT)? Is there a kind of “thumb of rule” depending on the strength of the bear leg and/or counting of bear bars to estimate higher probability of follow through on the downside (60, 70, 80%?). Thanks a lot in advance!