Trading Update: Thursday September 1, 2022
Emini pre-open market analysis
Emini daily chart
- Emini first reversal up likely minor. Bears have done a great job getting follow-through from the August 26 bear breakout.
- While the market is probably always in short, however, it is approaching support levels like the June 28 breakout point high, which is less than 10 points from yesterday’s close.
- The market is getting close measured move target (3,913) from the breakout below the neckline (August 24) of a double top. One can call this a failed double bottom; it does not matter, as the point is that the market broke below a Trading range and is getting a measured move down.
- The bears want a measured move down of the past four trading days. However, the problem the bears face is that the market is in the middle of a prominent trading range. In a Trading Range, there are buyers somewhere in the bottom third, which means the market may bounce before the bears can get all the way down to the July 14 low.
- Since the risk is getting big for the bears and the market is in the middle of a TR and last bull leg, this makes me think there will be a bounce soon as bears take profits and aggressive bulls buy for a scalp. Over the past four days, the selloff has been strong enough to get a second leg down, which means that the best the bulls can hope for is a minor reversal up and sideways.
- The bulls see this as a 50% pullback from the July – August rally and are interested in buying at this price level. They see the current price action as a developing higher low major trend reversal. Still, the problem the bulls have is that the channel from August 16 is a tight channel which increases the risk that any bottom here will lead to sideways trading.
- The bulls probably need a decent trendline breakout of the past four trading days and a retest of the August 31 low before they can get a credible buy setup.
- Overall, the bears want a continued selloff down to the June low, a low probability event, so there is a 60% chance the market will stay above the June low. The bulls want a higher low major trend reversal, a head and shoulders bottom.
- As stated above, the bulls’ problem is that the selloff from the August high is too tight, so the first reversal up likely minor. Both reasons above increase the odds of sideways trading and more trading range price action.
Emini 5-minute chart and what to expect today
- Emini is down 27 points in the overnight Globex session.
- The market is going to gap down.
- This means traders should expect sideways to the moving average and a trading range open. Traders should be open to a trend from the open up or down, but that is a lower probability.
- The risk is getting big for the bears on the daily chart, and that market is in the middle of a likely trading range (daily chart), so there is an increased risk that the bears will take partial profits soon. This means traders should pay attention to the open of the day as the market may try and close above it today.
- As I often say, most traders should wait for 6-12 bars before placing a trade. The open usually goes sideways and has lots of breakout attempts that fail. This means waiting for 6-12 bars will give traders clarity and prevent them from getting caught up in likely sideways price action on the open.
- Traders can also wait for a credible stop entry such as a double bottom/top, wedge bottom/top, or they can wait for a good, strong breakout with follow-through.
- Lastly, be patient on the open and trade the chart in front of you, not what you hope will happen.
Yesterday’s Emini setups
Al created the SP500 Emini charts.
EURUSD Forex market trading strategies
EURUSD Forex daily chart
- The bears had a Low 2 short on August 30, but the signal bar was terrible, and the market went outside up the following day (yesterday). Today the bears are trying to get a bear inside the bar, which would create a wedge bear flag.
- The problem with the wedge bear flag is that assuming today closes near its low, this would be the first bar In the past 7 bars that closed near its low with a big body, which is a sign of buying pressure. This increases the odds of more trading range price action and not bear trend price action.
- More likely, there will be buyers below, and the market will continue sideways to up.
- The market is in an overall trading range from the past few months and finding support at the 1.000 big round number. This increases the odds of a rally and tests back to the middle of the July – August trading range at a minimum.
- While the bulls have done an excellent job of developing buying pressure, they need to start getting consecutive strong breakout bars, or the market will continue sideways.
Summary of today’s S&P Emini futures price action and what to expect tomorrow
Al created the SP500 Emini charts.
End of day video review
- Delayed due to traveling. I am back in town and will post the end of day video 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.
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.