Trading Update: Wednesday March 23, 2022
Emini pre-open market analysis
Emini daily chart
- Emini bulls now have six consecutive bull closes on the daily chart.
- The odds are today will have a bear close below open, and the market will pullback for 1-3 days.
- So far, this is a strong enough rally to make the market always in long, and the first reversal down will likely be minor.
- Traders should expect a second leg up after and pullback.
- The next target for the bulls is the February 9 high and the 4,600 big round number. The bulls have enough momentum that the market will probably have to get there.
- The bears expect a second leg up, and they want the second leg to form a micro double top around the February 9 high. If the market forms a double top with the February 9 high (preferably if a double top nested within a micro double top), it would be a large double top lower high major trend reversal for the bears. They would have at least a 40% chance of getting a selloff to the February low.
- It is important to remember that this rally is within a trading range, so traders do not know how many bears are waiting to sell. This means bears could come in aggressively at the 4,600 price level or even the 4,800 price level (the all-time high).
- Overall, traders should expect today to have a bear close and the market to form a 1-3 day pullback on the daily chart. The pullback maybe 1-3 days of sideways and not go that low.
Emini 5-minute chart and what to expect today
- Emini is down 25 points in the overnight Globex session.
- The Globex market has sold off for most of the session and is forming a trading range within yesterday’s trend from the open.
- Overall, traders should expect the market to close as a bear day ending the 6-day consecutive bull rally on the daily chart.
- Traders should expect mostly a trading range day and look to buy in the bottom half, sell in the top half, and scalp. Also, traders should avoid trading in the middle of the trading range (poor math).
- If traders are not comfortable scalping, they should wait for a credible stop entry such as a double bottom/top or a wedge bottom/top, or wait for a strong breakout with follow-through.
- If the market is above the open late in the day and not far from it, traders should be aware of a likely selloff testing the open of the day.
Yesterday’s Emini setups
Al created the SP500 Emini charts.
EURUSD Forex market trading strategies
EURUSD Forex daily chart
- The bears have a credible double top forming a negative gap at the 3-month trading range low.
- The bears hope they can get a bear breakout testing the March 7 higher low. If the market does sell off, it will likely form a double bottom higher low at the March 14 low.
- The bear’s problem is that the market is in a trading range, and the double top bear flag the bears have is at the bottom of a channel. This means that there is a greater risk that the bulls will get a bull breakout of the bear flag (March 7 – March 17).
- The bears got a bad entry bar following the bear signal bar on March 21. This is a further sign of trading range price action.
- It is important to mention that double tops often have bad follow-through, and still 40% of the time (in general), they lead to a test of the low and try for a measured move down.
- So as unlikely as it seems, the bears still have a chance at a break below the March low, although it is not likely.
- Overall, traders should expect more sideways over the next couple of days as the market decides on the double top or the bull breakout of the bear flag.
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
- Today closed as a bear day on the daily chart, which ended the 6-day bull streak.
- The market triggered a low 1, which will probably find buyers tomorrow or Friday and continue sideways to up.
- On the open, the bulls got a wedge bottom that tested the low of yesterday.
- The overlap on the first six days showed that the market was likely to be a trading range day.
- The breakout at 7:15 am made the market always in long. However, the moving average was just about it, and the market had a big gap down on the open. These reasons increased the market’s odds, going more sideways than up.
- By 9:05 am, the market formed a wedge top. The bulls tried several times to get follow-through after the bull breakout at 7:15 am.
- The bulls gave up two bars later, and the market-tested back down to the open of the day.
- The bears tried to form a bottom at 9:45 am. However, the bears got a breakout that led to more sideways price action.
- Overall, today formed a wedge top that led to a trading range, which followed a bear breakout around 10:30. This breakout leads to another trading range, so that one would call it a trending trading range day.
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.