Trading Update: Wednesday November 8, 2023
S&P Emini pre-open market analysis
Emini daily chart
- The Emini is getting near the October 17 high and will probably reach it soon. The market may pull back first before the bulls are able to reach the October 17th high.
- Monday was a doji in a buy-the-close rally. Dojis are one-bar trading ranges, meaning Monday’s range will be a target, and the market will probably pull back in a day or two and test its high.
- Bears are hopeful that Monday’s high is a final flag that will cause yesterday’s breakout above it to fail.
- The Bulls have done an excellent job with the rally from the October 27th high. However, it is still below the October high. This means the October selloff and recent rally is a two-bar reversal on a higher time frame. This increases the risk of a deep pullback, possibly to the 50% level from the October 27th low to yesterday’s high.
- There are trapped bears who sold the rally above October 27th. They are trapped if they scaled in higher and are trapped in a bad short. Those bears will probably use a pullback to buy back shorts at a lower price, reducing their loss. The bulls know this, and they will look to buy any pullback.
- The risk traders face is getting trapped out of a breakout if the market continues to rally without a deep pullback. This would force traders to chase the market up, adding to the buying pressure.
- Overall, the odds favor a pullback that lasts at least 1-3 bars. However, traders should expect the first reversal down to fail.
Emini 5-minute chart and what to expect today
- Emini is up 6 points in the overnight Globex session. The Globex market has been in a tight trading range for most of the overnight session.
- Today will probably have a lot of trading range price action today as the market transitions into a trading range on higher time frames, such as the 60-minute chart.
- Today will probably close below the day’s open and end the streak of consecutive bull bars on the daily chart. This means that traders should pay attention to the open of the day as it will probably be a magnet, especially if today has a lot of trading range price action.
- Traders will look to sell rallies, especially if the market is above the day’s open.
- As I often say, most traders should consider not trading for the first 6-12 bars unless they can make quick decisions. The open usually has a lot of sideways trading, which is not ideal for traders starting out due to the requirement of limit order trading on the open.
- Most traders should try and catch the opening swing that often begins before the end of the second hour after the formation of a double top/bottom or a wedge top/bottom.
Yesterday’s Emini setups
Al created the SP500 Emini charts.
EURUSD Forex market trading strategies
EURUSD Forex daily chart
- The EURUSD has been in a bear channel on the daily chart since July.
- The bulls formed a recent upside breakout that is strong enough to likely get a second leg up. The bears want to trap the bulls and get a downside breakout.
- The bulls have broken the bear trendline and the daily chart is transitioning into a trading range.
- The target for the bulls is prior lower highs in the bear channel.
- The bears want the market to form a double top with the September 12 high. Next, the want the recent November 11th bull breakout to fail and lead to a reversal down and test of the October low.
Summary of today’s S&P Emini price action
Al created the SP500 Emini charts.
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.
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.