Trading Update: Tuesday April 19, 2022
Emini pre-open market analysis
Emini daily chart
- The bears failed to get a strong bear close yesterday, which lowers the chances of a bear breakout below the bull flag from March 29.
- The odds are beginning to favor the bulls, and a test back up to the March 29 close, and Emini may rally 200 points over next fortnight.
- Some bulls bought the March 29 close and could never get out breakeven. March 29 was a reasonable buy the close bar (although climactic), so the market will likely have to test back up to the March 29 close.
- Yesterday is a second entry for the bulls, which will likely trigger.
- It is possible that yesterday will be the low of the next couple of weeks, and the market forms a higher low that rallies 200 points.
- Less likely, the bears get a strong bear breakout below the April 18 low and a measured move testing the low of February.
- Traders have to remember the market is in a trading range, so if the market does rally, the bulls will likely be disappointed on the way up.
- Overall, traders will pay close attention today and tomorrow to see if the bulls can get strong follow-through after yesterday’s signal bar for the second entry.
- The bulls are hopeful that today will be a strong bull trend day, which would increase the odds that the rally up to the March 29 close is underway.
Emini 5-minute chart and what to expect today
- Emini is down 16 points in the overnight Globex session.
- The Globex market went sideways for most of the overnight session and had a bear breakout around 2:00 AM PT, which followed a rally back into the overnight trading range.
- Overall, traders should be open to the possibility of a bull trend day today (see above regarding second entry buy on the daily chart).
- Traders will look for signs of a strong trend on the open such as consecutive strong breakout bars. While a trend is possible, most opens are limit order markets, so traders should be cautious when trading breakouts on the open since most fail.
- If today is going to be a strong trend day, there will be plenty of opportunities to enter the trend’s direction.
- If a trader has trouble on the open, they should consider not trading for the first 6-12 bars and wait for clarity.
- As always, traders should wait for a stop entry such as a double top/bottom, wedge top/bottom, or a strong breakout with follow-through.
Yesterday’s Emini setups
Al created the SP500 Emini charts.
EURUSD Forex market trading strategies
EURUSD Forex daily chart
- Yesterday closed below the March 7 low, which is a sign of strength by the bears.
- The bears have had 12 bear bars out of the past 13 bars, which is a sign of strength.
- While the odds favor a rally and a failed breakout below the March 7 low, the bulls need a strong upside breakout or a reasonable stop entry.
- The odds are that the market will test back up to the April 13 close since it was a reasonable stop entry buy in a trading range. This means bulls will buy it and buy more at a new low and use a wide stop, confident the market will test back to it.
- While it is unlikely that the scale in bulls who are buying here will give up, it is possible that they will if the market keeps getting bear bars, which is why it is so vital the bulls take control of the market in the next day or so.
- While the selloff from March 31 has lasted many bars, it still looks like a leg in a trading range, which increases the odds that any bounce the bulls get will result in a minor reversal and more sideways.
- Ultimately, the bulls will probably test the March 31 high and the top of the bear trendline.
- Overall, the next day or two will be important. The bulls need to show their strength here, or the EURUSD may get a strong bear breakout below the March 7 low.
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
- The bulls ended up getting a strong trend day after April 18 second entry buy on the daily chart.
- Although the bears ended up getting today’s bar to close slightly above its midpoint, today was a strong enough bar on the daily chart to increase the odds of more up and a test of the March 29 close.
- By 6:55 AM PT, the market had broken above yesterday’s range and was clearly always in long. It was buy the close and the bulls could buy for any reason betting on a trend from the open and a swing up for at least a couple of hours.
- As long as a trader was comfortable with the risk, they could buy for any reason and use an appropriate stop. The challenging part with today is that the market is racing up, and it can become tempting to want to wait for a pullback that never comes.
- By 9:00 PT the market was likely to go sideways for a couple of hours so traders would likely exit longs and wait to see how strong the bears are.
- At 10:35 PT the bulls had a credible wedge bottom that led to two legs up and was followed by a lower high major trend reversal attempt at 11:00 PT. The bears failed and the market went sideways into the close.
- Overall, on days like today it is important to not be in denial when you see the strong bull bars on the open. It is important to find a way to get long, even if the smallest position size is possible.
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.
In a bull trending day if wait for 6-8 bars to enter will miss more than half of the move since most big moves happen in first 30 minutes. would it be ok just to enter at opening second green candle above first?
In the image above, Al has marked a bull stop half way up the 5th bar. This got you into about 60% of the stronger part of the opening bull trend. Entering earlier had a less attractive traders equation due to lower probability.
What are the probabilities the bears will get a BO below the current TR? We are, today, at the 50% retracement of the Bull trend 3/15-3/29. It would seem that its 50-50, correct? If I take yesterdays TR day 4406-4365 and do a MM, Bull BO could be up to 4,447 and Bear BO is exactly to 61.8% retracement of $4,322.25. I know Al says 50% RT is the only one, but the 61.8 seems to work for me at times… It will be interesting to see what happens, but I struggle with TR days and yesterday was an exercise in restraint, for me… Thanks! J
scratch that, I struggle with Trend days too. WOW. What a morning.
61.8% only works when the moon is waxing in the southern sky or waning in the northern sky.
Check out the “Moon Phases” indicator on TradingView it’s a cash generator.
Don’t tell Goldman Sachs.
Trading View Chart
This comment is 19 days late 🙂