Trading Update: Monday August 28, 2023
S&P Emini pre-open market analysis
Emini daily chart
- The Emini formed a bad follow-through bar after last Thursday’s big outside down bar.
- The bears are hopeful that last Friday is a pullback that will lead to a second leg down and a test of the August 18th low.
- The bulls see last Friday as a double-bottom formation with August 18th. Next, the bulls want strong follow-through.
- The bulls will probably need two to three consecutive bull bars before traders will be convinced that the market is Always In Long.
- With last Friday, having a tail above the bar will increase the odds of sellers above the bar.
- It is reasonable for bears to exit above last Friday’s high. This increases the risk that today might be a decent entry bar for the bulls. However, as stated above, the tail above last Friday’s high lowers the probability for the bulls.
- Overall, the market is probably transitioning into a trading range. However, the selloff down to the August low is tight enough that sellers are probably above the August 24th high.
Emini 5-minute chart and what to expect today
- Emini is up 20 points in the overnight Globex session.
- The Globex market recently formed an upside breakout. The bulls hope this will lead to a rally during the U.S. Session.
- The bears hope the rally is a pullback from last Thursday’s outside down bar. The bears hope that a bear trend or trading range will develop on the open.
- Traders should be prepared for a trading range open. This means most traders should consider not trading for the first 6-12 bars of the session unless they are comfortable with limit order trading.
- Most traders should try and catch the swing trade that often develops on the open. It is common for a swing trade to begin before the end of the second hour after the market forms a double top/bottom or a wedge top/bottom.
- Lastly, traders should assume a trading range will develop until there is an apparent reason to expect a trend. If today is going to be a bull trend day, there will be plenty of time to enter the trend’s direction.
Emini intraday market update
- The Emini triggered the buy above yesterday’s high, however, traders took profits, and the market went sideways for several bars.
- The first 10 bars of the day had a lot of trading range price action. This increased the odds of more trading range price action to follow.
- As of bar 54 (2:00 PM EST), the bears formed a downside breakout below 11:45 PM EST low. While the bears have done a good job, they need to do more.
- The risk the bears face is that the bar 54 selloff is a sell vacuum test of the trading range low.
Friday’s Emini setups
Al created the SP500 Emini charts.
EURUSD Forex market trading strategies
EURUSD Forex daily chart
- The EURUSD is in a tight bear channel with no sign of a bottom.
- While the market is forming overlapping bars, the bulls are failing to get a strong entry bar following bull reversal bars. This will increase the odds of sideways trading.
- The first reversal up will probably fail and lead to a trading range and not a bull trend.
- While the bulls have not done enough to reverse the tight bear channel, the bulls are making money with limit orders. This increases the odds of a trading range developing soon.
- The bulls need to make money above bars. Once the bulls can make money buying above a bull bar, the odds will increase that the bear channel is now in a trading range.
- Overall, traders should expect the market to go sideways soon. However, the bulls need to do more to convince traders that the bears are losing control.
Summary of today’s S&P Emini price action
Al created the SP500 Emini charts.
End of day video review
Here is YouTube link if video popup blocked:
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.