Trading Update: Wednesday November 9, 2022
Emini pre-open market analysis
Emini daily chart
- The bulls have four-bar bull micro channel, but only one bar is a bull trend bar, and the rest are doji bars. While the bulls might get a small second leg up, the odds still favor the bears getting start of second leg down from the November 2 breakout.
- It would be better for the bears if today is a bear bar closing on its low, creating a sell signal on the daily chart for start of second leg down. It would be a lower probability after the four-bar bull micro channel, but there would be bears that would sell betting on the second leg down.
- The bears need to show conviction here, or the second leg may be weak and lead to more sideways instead of down. If the bears are lucky, today could be the start of a selloff down to the October 21 low.
- The bulls will see any selloff as a more complex pullback from the rally that began on October 13.
- Even if the market gets down to the October 21 low, the bulls will see it as a double bottom higher low major trend reversal attempt, and they will buy.
- The bears want the current bar to be a pullback from the double top (October 21 and November 1). They want the market to sell aggressively, break out below the October 13 neckline, and fall for a measured move down. Next, those bears want the market to test the Monthly chart trendline (2008 and 20220 low).
- Today will be interesting to see if the bears can get a bear bar closing on its low or if there will be something wrong with the bear bar, which is most likely what will happen.
Emini 5-minute chart and what to expect today
- Emini is down 10 points in the overnight Globex session.
- The market has been in a trading range during most of the Globex session.
- Traders should expect the market to be neutral on the open and have lots of trading range price action.
- As always, most traders should consider waiting for 6-12 bars before placing a trade. Breakouts on the open have a higher probability of failing; by waiting for at least 6 bars, the probability will go up for a trader.
- Traders can also consider looking for a stop entry based on a double top/bottom or a wedge top/bottom. It is common for the market to form one of these patterns on the open.
- Traders should pay attention to the open of the day as the bears will try hard to close the market below the open.
- Traders should also be open to a bear trend day for the reason stated above.
- the essential thing on the open is to remember that there are 81 bars in a day and plenty of trading opportunities. This means traders must be patient and not be too eager to trade, especially in the open.
- Lastly, as Al often says, “Price is truth” this means that traders cannot be in denial based on what the chart is telling them. Just because the odds may slightly favor a bear trend day, traders will look to buy if the bulls begin to get consecutive bull bars closing above their midpoints on the open.
Yesterday’s Emini setups
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
- The bears are trying to create a double top with October 27 to prevent the upside breakout.
- After three consecutive bull bars closing above their midpoints, the probability is low for the bears.
- The bears need today to close near its low, and even if they accomplish this, more likely, there will be buyers not far below, and the market will have to get above the October 27 high.
- The current selloff is likely due to profit-taking at the October 26 close.
- While it is possible the bears can get the double top, the problem the for the bears is that the market is getting too many bull bars closing on their highs.
- The other problem the bears have is that the market has been in a broad bear channel on the daily chart since the middle of 2021. Bear channels should be considered bull flags since most have an upside breakout converting the channel into a trading range. This means the odds favor a rally on the daily chart lasting several months, transforming the daily chart channel into a trading range.
Summary of today’s S&P Emini futures price action and what to expect tomorrow
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.
