Trading Update: Wednesday September 7, 2022
Emini pre-open market analysis
Emini daily chart
- The bears broke below the September 1st low but failed to close below, which is a sign of weakness.
- The market will probably have to bounce soon with Emini likely rally and test of 4,000 big round number.
- The odds favor buyers below the September 1st low and sideways.
- The market is at a few support levels at the July 8 and June 28 highs. The market is also testing the 3,900 big round numbers, another support level.
- The channel down from the August 26 high is tight, and the bears hope they can successfully break far below the July 26 and September 1 lows. This is a double bottom, and if the market breaks below, it would be a breakout below a double bottom so that traders will hope for a measured move down to the June 17 low.
- There is a 60% chance that the market will not reach the June low before the end of the year. This means that sideways is most likely.
- Overall, the odds favor a bounce over the next week. The bears are doing a good job. However, the market is in a trading range and at support levels where it makes sense for bears to take profits and bulls to begin to buy for scalp.
- The bulls need strong buy signal bars soon, or the odds favor sideways.
- The bulls had a chance yesterday to get a credible buy signal (even though the channel down is tight) and failed.
- It is also important to note that the channel down to September 1 is tight, so the odds favor that the first reversal up will likely be minor and lead to sideways.
Emini 5-minute chart and what to expect today
- Emini is down 2 points in the overnight Globex session.
- The Globex market broke below yesterday’s triangle pattern that formed during the U.S. Session. The bear breakout failed, and the market reversed into the triangle’s apex.
- The market will likely have a lot of trading range price action on the open.
- As I always say, most traders should be patient on the open and wait for 6-12 bars before placing a trade.
- Traders can also consider waiting for a credible stop entry like a double bottom/top or a wedge bottom/top.
- One can also wait for a credible breakout with follow-through above/below support or resistance.
- If most of the day is sideways, traders should pay close attention to the open as it will likely be a magnet.
- Lastly, as Al has said for so long, traders must trade the chart in front of them and what they hope the market will do.
Yesterday’s Emini setups
Al created the SP500 Emini charts.
EURUSD Forex market trading strategies
EURUSD Forex daily chart
- The bulls failed to get a strong entry bar yesterday following Monday’s weak buy signal bar.
- The bears want a continued selloff but will likely have difficulty breaking far below the June 23 low.
- The past five trading days look more like a leg in a trading range than a strong trend.
- The bears see the market as an overall bear channel, and they are correcting it. However, the bears’ problem is that the market is going sideways.
- Overall, the EURUSD will probably bounce soon and test back into the middle of the July – August trading range. Part of the reason I think the market will bounce here is that it will likely have difficulty getting far below the 1.000 big round number.
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
- Today was a bull channel that evolved into a small pullback bull trend day.
- One can also call today a trend from the open, although it was unclear at the time since it looked more like a leg in a trading range.
- The market was Always In Long on bars 2-3, but the pullback was deep, which increased the odds of a leg in a trading range and not a strong trend.
- One important thing to realize is that the bulls had many bull bars closing above their midpoints for the ffirst18 bars, which was a sign that the market may go higher.
- The bears tried to form a wedge top around 8:30 PT, however, it only led to a two-legged sideways correction, and the bulls got a surprise breakout during the 9:45 PT rally.
- The breakout test around 10:00 formed a gap, and the market continued to break out to the upside in a strong small pullback bull trend that led until the rest of the day.
- It is important always to be paying attention to gaps when there is a leg in what looks like a trading range because if one forms, it has the potential to trap counter-trend traders and lead to a strong breakout. This is also why small pullback trends are difficult to trade. They never look clear until the move is already extending, and at that point (take the 10:45 PT area, for example), it does not look like the market will go further.
- Today was a good day for the bulls. The market found support around the June 28th and July 8th highs. Tomorrow the bulls will try and get strong follow-through after today’s surprise bar up. The recent channel down on the daily chart Is tight, increasing the odds of more sideways and bulls getting disappointed tomorrow.
- Most short end-of-day summary videos will be released 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.
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.