Trading Update: Monday August 15, 2022
Emini pre-open market analysis
Emini daily chart
- Emini testing bull channel top, with strong close last week.
- Bulls are trying their best to reach 4,300 and top of bull channel from the January high and the March 29 high.
- The rally is becoming exhaustive, increasing the odds of a pullback soon. When the pullback happens, there will probably be buyers not far below.
- The bulls also have a measured move projection from the measuring gap at 4,400 (July 22 high and August 2 low).
- While one can argue the rally up from the July 14 low is becoming parabolic, there is no sign of a top yet.
- The market will probably get up to the top of the bull channel (4,350 area) and possibly up to the 4,000 big round number; however, the market may have to pull back first.
- If the market does pull back, the best the bears can hope for is sideways and a trading range.
- Friday (August 12) is a possible exhaustion bar following a climactic rally. It is the best-looking bar in the rally, increasing the odds of a pullback and test of Friday’s low.
- Bears want the market to reverse, but the channel up is so tight that the best the bears can likely hope for is sideways.
- The bears have not made money on a stop entry since the July 14 rally started. The first reversal down is likely to go sideways, so bulls are willing to buy any pullback.
- If the bears can get enough selling pressure in the form of 1-2 strong bear bars or several consecutive bear trend bars, that would increase the odds of a trading range developing. If a trading range develops. The bears will likely need some micro double top below the bears can get a credible short.
- As strong as the bull rally from the July 14 low is, it is still a likely leg in a developing trading range. Even if the market gets back to the March 29 high or even the January 2022 high, the odds will still favor a trading range and reversal down.
Emini 5-minute chart and what to expect today
- Emini is down 23 points in the overnight Globex session.
- Market will gap down today. Traders should assume the day will have a trading range open as it usually does.
- Traders should wait for a credible stop entry setup such as a double top/bottom and wedge top/bottom before looking to take a swing trade.
- Traders can also wait for a credible breakout with follow-through of the opening range if they want a higher probability.
- Most importantly, traders should assume trading range price action until they are proven wrong. This means that traders should expect most breakouts on the open to fail, which means traders should consider waiting for 6-12 bars before placing a trade.
- If the day has lots of trading range price action and the open is close to the middle of the day’s range, traders will pay close attention to it as the market may test it later in the day as traders decide on a bull or bear close to the day.
- Since last Friday was a possible exhaustion bar, today has the potential to close below the open of the day, so traders should be aware of that.
Friday’s Emini setups
Al created the SP500 Emini charts.
EURUSD Forex market trading strategies
EURUSD Forex daily chart
- The EURUSD is testing the middle of the July tight trading range following a selloff of the 2017 low. This is profit taking from the 2017 low, and the pullback is deeper than the bulls want.
- The bulls are being reminded here that the market is still in a trading range, not a bull trend.
- The odds still favor higher prices, but the market could pull back below the July low before the resumption begins.
- It would still be better for the bulls if the market sells off to the July 14 low and forms a double bottom. If the selloff that tests the July 14 low is weak, this will increase the odds of the bulls getting a successful double bottom major trend reversal, and a breakout above the neckline (August 10) with bulls getting some measured move up.
- The bears want the selloff down to the July 14 low to be strong and break far below it; however, that is not likely.
- Overall, traders should see how today closes. Since the market is likely in a trading range, traders should expect the bears to be disappointed soon, just as the bulls were disappointed with the rally up the 2017 low.
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
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.