Emini Profit Taking Likely Soon

Trading Update: Wednesday September 28, 2022

Emini pre-open market analysis

Emini daily chart

• Emini profit taking likely soon after market broke below the June 17 low yesterday and failed to close below.
• The market may have a minor reversal up; however, after six consecutive bear bars, the market will likely have to go a little lower and reverse up.
• Traders see the June 17 low as a very important price level. The bears have a chance to get a strong breakout below the June low and get the 400-point selloff down to the 2020 Pre-Pandemic high.
• A successful bear breakout down to the 2020 Pre-Pandemic high would be a low probability event, however, the risk is real and is certainly possible. What is the probability of getting the 400-point selloff from here? Who knows, but it is greater than 30% and possibly much closer to 40%.
• More likely for the bears would be a breakout that goes a little bit lower but fails to go 400 points lower.
• The bulls see the market at the bottom of a trading range lasting several bars. They will be eager to buy, betting any breakout below the trading range will fail and lead to a reversal back up.
• At the moment, the odds favor the bulls, but with six consecutive bear bars, traders have to wonder if the bears will win.
• The bulls have not been able to get a strong bull close yet which would be a sign of aggressive buying at the June low.
• If the bears get a successful breakout below the June low, it could happen quickly. Notice how quickly the market sold off after the September 13 bear breakout. If the same thing occurs below the June low, it will not take long to get a fast 300–400 point selloff and test the 2020 Pre-Pandemic high.
• Overall, the bulls need to show strength here and get a strong bull close today or tomorrow. If the bulls fail to show signs of power, such as strong bull closes, it will increase the risk of a downside breakout.

Emini 5-minute chart and what to expect today

• Emini is up 4 points in the overnight Globex session.
• The Globex market formed a wedge bottom on the 15-minute chart around 3:00 PT.
• At the moment, the bulls are getting a bull breakout and are at yesterday’s day session closing price.
• The bears have six consecutive bear bars on the daily chart, which increases the odds that today will have a bull close and end the bear streak.,
• The bulls want today to be a robust bull reversal bar which would disappoint the bears.
• Traders should be open to a possible bull trend from the open but expect a trading range available.
• As always, traders should consider waiting for 6-12 bars before placing a trade. Most opens go sideways, and if a trader is patient and waits for 6-12 bars, they will lower their odds of getting trapped into a bad trade on the open.
• Traders can also wait for a credible stop entry, such as a double top/bottom or a wedge top/bottom.
• Traders need to pay close attention to the open of the day today as it could be a magnet all day. If the bulls fail to get a strong trend day, the next goal will be a close above the day’s open, ending the bear streak.

Yesterday’s Emini setups

Here are several reasonable stop entry setups from yesterday. I show each buy entry with a green rectangle and each sell entry with a red rectangle. Buyers of both the Brooks Trading Course and Encyclopedia of Chart Patterns have access to a much more detailed explanation of the swing trades for each day (see Online Course/BTC Daily Setups).

My goal with these charts is to present an Always In perspective. If a trader was trying to be Always In or nearly Always In a position all day, and he was not currently in the market, these entries would be logical times for him to enter. These therefore are swing entries.

It is important to understand that most swing setups do not lead to swing trades. As soon as traders are disappointed, many exit. Those who exit prefer to get out with a small profit (scalp), but often have to exit with a small loss.

If the risk is too big for your account, you should wait for trades with less risk or trade an alternative market like the Micro Emini.

EURUSD Forex market trading strategies

EURUSD Forex daily chart

• The EURUSD has six consecutive bear closes, a strong enough breakout that the first reversal up will likely fail and lead to a sideways move at best for the bulls.
• Yesterday was an inside bar which triggered a L1 short below it. There may be more buying below yesterday’s L1, and the market will soon have a minor pullback.
• At the moment, the odds favor at least a second leg down after the six bear bar micro channel.
• The problem for the bears is that this is a strong bear micro channel late in a bear trend which increases the odds of exhaustion soon and the market testing up to the September 20 high.
• The bulls need to begin showing signs of strength here before traders will agree that the market is going up to the September 20 close.
• Overall, there are probably sellers above, and the market will likely have to go sideways after a reversal up that is likely to be minor.

Summary of today’s S&P Emini futures price action and what to expect tomorrow

End of day review

• Today was a small pullback bull trend day following a surprise bull breakout on the open.  
• It is important to notice that the bulls were forming gaps up, which increased the odds of trapped bears and higher prices.
• The bulls got a surprise breakout (blue box) around 9:30 (Central Time) that led to a bull trend for the rest of the day.
• Bull trends are constantly forming wedge tops, and it is essential not to be too eager to pick a top. In general, it is best to wait for a strong trendline break and closes below the moving average, followed by a retest of the highs before looking to short.
• Also, it is best to assume that every reversal attempt will be minor until proven wrong.
• Notice how the bears could not make money selling below bars for most of the day. This is a sign of a very strong trend.
• End of day video to follow soon.

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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Trading Room

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.

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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.

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