Trading Update: Thursday September 29, 2022
Emini pre-open market analysis
Emini daily chart
- The bulls got a bull reversal bar yesterday, ending the six-bar bear micro channel streak.
- A minor reversal up means traders should expect more sideways than straight up.
- The bears will look to sell the first reversal up. They want to prevent the bulls from showing signs of strength, such as getting consecutive bull bars closing above their midpoints.
- The bull sees the current selloff down to the June low as consecutive sell climaxes, and they want a successful reversal up, which would be a failed breakout of the June low.
- The bears want the market to break far below the June low and trap any bulls who bought betting on a trading range bottom.
- If the bears are successful, the downside breakout could be quick, and it is possible the market would have to get down to the 2020 Pre-Pandemic high.
- More likely, the bear breakout below the trading range low will fail, and the market will test back to the middle of the trading range over the past five months.
- While the odds favor sellers above a 6-bar bear micro channel, there is a greater risk that the bulls could win and trap the bears. One can argue that this current selloff is the third or fourth push down from the August 16 high, increasing the odds of a failed bear breakout soon.
- The bears who sold the low close of the past couple of days are not holding a losing position after the bull close yesterday. Those bears will likely be disappointed enough to want to exit breakeven back at the low close. That means there will likely be buyers below, increasing the odds of higher prices.
- The reality is that the bulls need 2-3 average consecutive bull bars closing above their midpoints or at least a micro double bottom before bulls will be eager to buy.
Emini 5-minute chart and what to expect today
- Emini is down 40 points in the overnight Globex session
- The Globex market has sold off since yesterday’s U.S. session close and testing below midpoint of yesterday’s range.
- The bulls will want a higher low and a second leg up following yesterday’s bull rally.
- Today will be important for the bears. The bears now have a 6-bar bear micro channel, and the bulls ended it yesterday. The bulls will try their best to get a second consecutive bull bar today, closing above yesterday’s bar. The bears need to prevent the bulls from getting this which would increase the odds of a second leg down and another attempt below the June low.
- If the bulls can get a strong bull trend today, it will increase the odds of higher prices.
- As always, traders should expect a limit order open and wait for 6-12 bars before taking any trades.
- Traders can also consider waiting for a credible stop entry, such as a double top/bottom or a wedge top/bottom.
- More likely, today will disappoint both the bulls and bears and go mostly sideways.
Yesterday’s Emini setups
EURUSD Forex market trading strategies
EURUSD Forex daily chart
- The bulls got a strong reversal bar yesterday. This is a strong enough surprise bar that the odds favor at least a 2nd leg up.
- Today tested the midpoint of yesterday’s bar as traders tried to buy there with limit orders.
- The bulls want today to have another strong bull close; however, after a six-bar bear micro channel, the bulls will likely be disappointed today.
- Ultimately, the odds favor a test of the September high, but the market will likely have to go more sideways here first.
- While yesterday’s bull reversal bar may be the start of the reversal up, it is more likely that the market will go sideways to up here rather than straight up.
- Traders will pay close attention to today to see the resolve of both the bulls and bears.
Summary of today’s S&P Emini futures price action and what to expect tomorrow
End of day review
- Today was a bear trend from the open that led to a trading range day. When the market forms a trend from the open, there is a 60% chance that the day will evolve into a trading range.
- The bears got three strong trend bars on the open, so the odds at that point favored a Trading range day or a bear trend day. The bears ended up getting a measured move down.
- The bulls got a reversal up around 9:30 Central time after the market formed a parabolic wedge bottom. However, the reversal up was likely to be minor.
- The selloff down to 9:30 (central time) was climactic, increasing the odds of a reversal lasting several bars, even if it was only minor.
- Overall, the day was a trading range day, meaning one should look to buy low, sell high and avoid the middle. Look to sell when you have a move that has had two or three legs up. The opposite goes for the bear legs after two or three legs down.
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.