Trading Update: Tuesday October 3, 2023
S&P Emini pre-open market analysis
Emini daily chart
- The Emini found buyers below last Friday’s Low 1 short, forming a second entry buy a the 200 – Day Moving Average
- The bulls are hopeful that today will form an upside breakout and test the August 18th low.
- Next, the bulls will try to get a strong bull close beyond the August 18th low, increasing the odds of higher prices.
- The bears want the August 18th breakout point low to stay open, leading to a measuring gap. However, since the daily chart is in a trading range, the odds are against the gap staying open.
- The bulls are hopeful that the selloff from the July high is a large two-legged pullback and that a test of the July high will follow.
- The selloff is large enough that there are likely sellers somewhere above, making the argument of a bull trend unlikely.
- Since traders see the market as being in a trading range, trades will look to buy and scale in lower. The bears will look to sell two and three-legged rallies, scaling In higher.
- The channel down to the October low is tight, lowering the probability of a major reversal. Tight channels typically reverse into trading ranges and not opposite trends.
- The bulls will likely need a stronger trendline break than they have right now.
- The bulls must also overcome yesterday’s bad second entry buy signal bar. One way they can accomplish this is by forming a strong entry bar today.
- If the market gets a breakout above yesterday’s high, the bears will try and form a second entry sell.
Emini 5-minute chart and what to expect today
- The Globex market pulled back and formed a small second leg up after yesterday’s late bull breakout during the U.S. session but then sold off 30+ points before day session open.
- The bulls will try to trigger the buy signal on the daily chart by going above yesterday’s high, and the bears are working to prevent this.
- As always, traders should expect the open to have a lot of trading range price action on the open.
- There is an 80% chance of a trading range open and only a 20% chance of a trend from the open. This means that most traders should be patient on the open and consider waiting for 6-12 bars before looking to enter.
- Most traders should try and catch the opening swing that will typically begin before the end of the second hour.
- It is common for the market to form a double top/ bottom or a wedge top/bottom before the open swing begins. This allows traders to try and enter on a stop entry, allowing for a strong risk/reward trade with decent probability.
- Traders should pay attention to the open of the day as well as yesterday’s high. The bulls will try their best to get a strong breakout and close above yesterday’s high, and the bears will try to prevent this.
- Lastly, being patient is the most important thing on the open. Most of the time, the open has a lot of trading range price action. This means that most days, a trader will not miss out on the opening swing if they wait 6-12 bars. By waiting, traders give up opportunities to trade for certainty of the day structure.
Yesterday’s Emini setups
Al created the SP500 Emini charts.
EURUSD Forex market trading strategies
EURUSD Forex daily chart
- The Bears formed a bear breakout below the September 29th Low 1 short. The odds favored buyers below the Low 1, and now the bulls are trapped.
- The daily chart has been in a tight bear channel for some time. This increases the odds of a trading range forming soon.
- The odds favor buyers below the September 27th low and the market reaching the moving average.
- However, because yesterday’s selloff was a surprise, the bears may get a brief 2nd leg down before the bulls get their reversal up.
Summary of today’s S&P Emini price action
Al created the SP500 Emini charts.
End of day video review
End Of Day Review will be presented in the Trading Room today. See below for details on how to sign up.
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.