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Emini Sideways to Up Likely and Test of 4,000

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Trading Update: Thursday October 6, 2022

Emini pre-open market analysis

Emini daily chart

  • The bulls got a second leg up from the two-bar bull breakout on Monday and Tuesday. They are hoping for sideways to up likely with test of the 4,000 big round number. However more likely the market will continue sideways for now.
  • The bulls are trying hard to reach the September 20 low and close the breakout point.
  • As strong as the rally has been this week, it is still more likely a minor reversal that will go sideways instead of straight up.
  • The rally is strong enough for traders to buy any reversal attempt.
  • The bears want a second entry sell and for today to be an inside bar closing on its low. The bears would see it as a bull trap and try to get a breakout below the June low.
  • The bulls are deciding if they should buy here or look to buy lower, like the bottom of the October rally.
  • Although the odds are against a successful breakout below the June low, the risk is real for the bulls.
  • Traders do not know how many institutional dollars are on the sidelines waiting to sell, and those bears may be waiting for a second entry short such as a bear inside a bar today.
  • More likely, the market will continue sideways to up and test the 4,000 considerable round number.

Emini 5-minute chart and what to expect today

  • Emini is down 20 points in the overnight Globex session.
  • The Globex market sold off over 50 points after forming a wedge top around 10:00 PM PT but rallied strongly since 04:00 AM PT up near to close of yesterday, then down again.
  • As always, traders should expect a limit order market and sideways trading on the open.
  • Traders should consider not placing any trades for 6-12 bars since the odds favor multiple reversals on the open.
  • A trader can also wait for a credible bottom or top, such as a double top/bottom or a wedge top/bottom.
  • Traders should pay attention to the open of the day, and if it is in the middle of the day’s range, they should expect the market to continue as a trading range day.
  • Overall, traders should assume the day will be a trading range until proven otherwise. If the day is going to be a trend day, there will be plenty of time to enter in the direction of the trend.
  • It is easy for traders to get trapped into hoping for a breakout and entering too early, betting on the successful breakout and not allowing it to break beyond support/resistance. In general, this will cause a trader to lose over time because they will inevitably buy too high, sell too low in a trading range, and get trapped, taking a significant loss.
  • Lastly, traders should remember to be patient. There are plenty of trade opportunities, so traders must focus on reducing lost trades. One way to do this is to be more selective.
  • Below is an excellent Al Brooks video that discusses reducing the number of “bad trades” as discussed above. This is a great reminder going into the trading session.

Yesterday’s Emini setups

Emini failed breakout below triangle open and then small pullback bull trend. Sideways to Up Likely.

Al created the SP500 Emini charts.

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

EURUSD Daily: Second Leg up Likely, Might Pullback 50% First
  • The bulls have a 6-bar bull micro channel that reversed right after the October 4 rally to the 1.000 big round number. This reversal is more likely a pullback than a reversal of the 6-bar micro channel.
  • The market is still in a trading range, so the pullback could be deep and test the 50% pullback of the rally (blue line).
  • The bears see October 4 as exhaustion and expect the upside breakout to fail and at least go sideways. The bears ultimately want a selloff back down to the low of the year.
  • More likely, the market will get above the September 20 and 12 highs.
  • Overall, the market may have to pull back for a day or two before the bulls can get their second leg up. It is important to remember that a second leg up could be one bar above the October 4 rally before there is a more complex pullback.

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

Emini 5-min Chart Triangle and Weak Late Bear Breakout

Al created the SP500 Emini charts.

End of day review

  • I will update at the end of the day.

See the weekly update for a discussion of the price action on the weekly chart and for what to expect going into next week.

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.

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.

  • hello brad, could you offer your thoughts on trading the close of bar 12 on thur 10-6?

    i was having a nice day until this bar wrecked me.

    i entered using a stop below the bar and was looking for atleast a test of the 50/51 area. i viewed the market as always in short, thus somewhat necessitating a “stronger” bottoming formation than the micro double bottom that occurred on bar 13 and 14 – essentially a scalp below my entry.

    the price was near to the globex low, but had two bars closing below it on their lows, again sort of convincing me that i was ok to enter short there given the context and look for something beyond a scalp.

    im curious how you would have seen that set up. and if you had taken the trade how would you have managed it? any tips how i could have avoided this trap? i still feel it was a good trade and attempt to test lower now, having ruminated on it all day. in the last hour it did exactly what i thought it could do around bar 12.

    i ended up losing about 21 points on the trade. the move up was shockingly strong to me and i feared it was always in long and could go back toward the high of the day.

    thanks so much for your thoughts i appreciate your insight.

    • Hello Andrew
      It is just my personal view. I went long on bar 13 for some reasons. 1) Market reacted strongly to the PM low. 2) formed spike and channel bear trend. 3) Kind of measuring gap 4) Sell vacuum test of yesterday open and my target was opening range. these days we can see this often happens

    • My personal view – You are selling at the bottom of a TR, Low of globex, 3rd leg of wedge bottom, at the open of the previous day, testing the bull bar that have made the previous day always in long, 60m ema.

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