Trading Update: Tuesday September 27, 2022
Emini pre-open market analysis
Emini daily chart
- Emini likely reversal up soon despite the Emini coming close to falling below the June low on the day-only session but going below it on the Globex session.
- The bears want a strong breakout below the June low and a 400-point selloff down to the 2020 Pre-Pandemic high.
- More likely, the bears will fail around the June low, and the market will reverse up and disappoint the bears within the next few days.
- The channel down is tight, which increases the odds that the first reversal up will fail. The bulls will likely need a micro double bottom after a 4-bar bear micro channel.
- Traders will pay close attention over the next few days to see how disappointed the bears will be. If today or tomorrow is a big bull trend bar, that will further traders’ belief that this selloff was a sell vacuum test of the June low and that the market is in a trading range.
- If today or tomorrow is a big bear trend bar, that will make traders hesitate to buy, worried about the risk of a downside breakout.
- The market is back at a 20% correction since the January 2022 high. This is an area where value traders will be happy to buy Even if the market sold off another 400 points down to the Pre-Pandemic highs, they would not care because they would buy lower. These value traders will see any price level below a 10% correction as an excellent opportunity to buy.
- Overall, the upside will likely be limited after four consecutive bear bars; however, with the market being at support, traders may be more interested in buying back shorts down here.
Emini 5-minute chart and what to expect today
- Emini is up 50 points in the overnight Globex session.
- The Globex session has been in a rally since yesterday’s close and tested the high of the past two trading days.
- The bulls want an upside breakout of the two-day trading range, which would disappoint the bears daily.
- Right now, the market will gap up on the open.
- Traders should expect the market to go sideways to the moving average, limiting the order market on the open.
- Traders should also consider not trading for the first 6-12 bars.
- Traders can also wait for a credible stop entry for a bottom or top in the form of a double bottom/top or wedge bottom/top.
- Since there will likely be a big gap up on the open, traders should be available for the possibility of a bull trend day. The bears want the opposite and for the day to open with a lot of trading range price action and a selloff erasing the gap on the open.
Yesterday’s Emini setups
EURUSD Forex market trading strategies
EURUSD Forex daily chart
- The bears have a five-bar bear micro channel, increasing the odds that the first reversal up will fail.
- The problem the bears have is that this selloff is probably exhaustive, so any second leg down will probably be limited.
- So, if the upside is limited due to the five consecutive bear bars, and the downside is likely limited due to possible exhaustion, sideways here is most likely.
- The bulls want to form at least a micro double bottom and get a rally to disappoint the bears.
- The bears want to prevent the bulls from developing buying pressure.
- Look at every big selloff over the past five months and notice how each one had at least a 50% pullback. The current selloff will likely have at least a 50% pullback.
- Although the market may rally soon, it is essential to recognize that the market is in a broad bear channel, which typically evolves into a trading range before it becomes a bull trend. The upside is probably limited to around the September high or lower.
- Overall, traders will pay close attention to the bulls’ resolve today. Traders want to see if the bulls are strong enough to get a bull trend bar closing on its high, which would disappoint sell the close bears. If the bulls can get a good bull close today, this might entice bears to buy back shorts around the low, betting on a bounce.
Summary of today’s S&P Emini futures price action
End of day video review
See the weekly update for a discussion of the price action on the weekly chart and for what to expect going into next week.
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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.