Trading Update: Wednesday August 23, 2023
S&P Emini pre-open market analysis
Emini daily chart
- The bears formed a Low 1 short yesterday, following a brief two-bar pullback.
- The bears hope they will get trend resumption today, and the market will find sellers below yesterday’s low.
- The bulls will see the recent two-day rally as strong enough for a second leg up. Therefore, they expect buyers below yesterday’s low and for the Low 1 to lead to a more complex pullback, such as a Low 2 (second entry short).
- While the rally over the past couple of trading days is disappointing for the bulls, it is not enough to end the argument of a bear trend.
- The bears still have the argument of last week’s breakout below the bear flag (July 27th to August 11th), leading to a measured move down to the February 2nd high.
- Today, traders will pay attention to what kind of entry bar the bears will get. The bears hope they will be strong enough to find sellers below yesterday’s low. The bulls want the exact opposite. They hope there are more buyers below yesterday’s low and the market gets a second leg up after the rally that began last Friday.
Emini 5-minute chart and what to expect today
- Emini is up 10 points in the overnight Globex session.
- The Globex market rallied for most of the early morning hours. However, it formed a lower high with yesterday’s selloff and recently formed a second leg down.
- The 60-minute Globex chart is forming a trading range and will probably go sideways for several hours.
- Traders should expect a lot of trading range price action during the open of the U.S. Session. This means that most traders should consider being patient on the open and not being in a rush to trade.
- Most traders should consider waiting 6-12 bars before placing a trading unless they are comfortable with limit order trading.
- If today is going to lead to a strong trend day, there will be plenty of time to enter the trend’s direction. A trend must last for several bars, allowing a trader plenty of time to join the trend’s direction.
- The best thing a trader can do on the open is be patient.
- It is easy for a trader to overtrade on the open and take 1-2 big losses, causing the trader to spend the rest of the day trying to get back to breakeven. The range is often big on the open and contracts as the day progresses, making it even more challenging to get back to breakeven.
- Lastly, traders should pay close attention to the day’s open and yesterday’s low. The bulls expect buyers below yesterday’s low. The bears hope today will lead to a strong entry bar below yesterday’s low.
Emini intraday market update
- The Emini went sideways for the first 3 bars of the day and bull trend from the open.
- While the bulls have done a good job, the market has gone sideways for over 20 bars. This is a sign that the market is transitioning into a trading range.
- There is a 60% chance that the bull trend from the open will transition into a trading range and not remain a bull trend for the rest of the day.
- The bears need to develop more signs of strength to take control of the market.
- At a minimum, the bears need to get closes below the moving average, and if they are successful, the odds will favor a Trading range more than a bear trend.
Yesterday’s Emini setups
Al created the SP500 Emini charts.
EURUSD Forex market trading strategies
EURUSD Forex daily chart
- The EURUSD broke below the July 6th low today and is 29 pips below it.
- The bears hope they can get today to close far below the July 6th low, increasing the odds of lower prices.
- The bulls will see a bear breakout below a bear channel today. They will expect the market to reverse up within a few bars. The problem with this argument is that the channel down is tight, which lowers the probability of bulls buying.
- There is a possible negative gap with the August 3rd low and the August 22nd high, which may lead to a measured move down.
- It is possible the market has to get down to the June 1st low before buyers come in.
- Right now, traders will pay attention to the close of today. The bears are hopeful it will close on its low, which would signify traders selling into the bar’s close. The bulls want the opposite and are hopeful that it forms a tail below the bar today and forms a close near its midpoint. This would signify profit taking into the close and a lack of urgency to sell.
Summary of today’s S&P Emini price action
Al created the SP500 Emini charts.
End of day video review
Here is YouTube link if video popup blocked:
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.