Trading Update: Thursday April 21, 2022
Emini pre-open market analysis
Emini daily chart
- Emini testing midpoint 4,500 of the March 31 selloff. This is an important magnet, so the market may have to go sideways here for a couple of days.
- The bears got a bear doji bar on the daily chart, which is a sign of hesitation by the bulls. This is also a sign of more trading range price action.
- Some traders who bought the April 18 bull close on April 19 likely took partial profits yesterday, betting on disappointment and trading range price action.
- When the market is in a trading range, and there is something that looks promising for one side, such as the April 19 bull trend bar, there is usually something that quickly disappoints the bulls, like yesterday’s bear doji bar.
- Trading ranges are notorious for confusing traders and making them question the probabilities. This is because the probability is never as high as traders want, which causes traders to use wide stop and scalp.
- Even though yesterday was a bear doji, it is a lousy stop entry short which increases the odds of more up. The bulls hope to get a bull breakout of the April 11 – April 20 bear flag and test back up to the 4,600 round number.
- Overall, the bulls were able to close the possible measuring gap below April 7, so no, it is more likely an exhaustion gap. This means that the odds favor sideways to up and a test of the March 29 close.
- 4,500 will be a significant price level. It is close enough to the midpoint of the March 29 selloff so that the market may go sideways there.
- Overall, traders should expect more sideways to up and a test of the March 29 and test of the 4,600 round number.
Emini 5-minute chart and what to expect today
- Emini is up 30 points in the overnight Globex session.
- The bulls have been in a broad bull channel since yesterday’s U.S. Session close.
- The overnight session has had a lot of trending trading range price action, which increases the odds that that market will go sideways on the open.
- Overall, traders should expect trading range price action on the open and a limit order market. In general, traders should consider waiting for 6-12 bars before trading.
- Traders can also consider waiting for a credible stop entry such as a double top/bottom, wedge top/bottom, or a strong breakout with follow-through
- As stated above, the market is close to 4,500, which is the midpoint of the March 29 selloff. Traders should pay attention to this price level because the market may go sideways at that price level, or the market will get a potential bear breakout.
Yesterday’s Emini setups
Al created the SP500 Emini charts.
EURUSD Forex market trading strategies
EURUSD Forex daily chart
- The bulls got a strong bull entry bar yesterday after the April 19 second entry buy following the failed breakout below March 7.
- Today has already gone above April 13, which was a logical area for scale in bulls to take some profits. Some bulls bought April 13, scaled in lower, and got out breakeven back at the April 13 close.
- The odds are the market will reach the midpoint of the March – February trading range and ultimately break above the March high and test the bear trend line above.
- The channel down from March 31 was tight, so the current rally is likely a minor reversal and will lead to more sideways than straight up.
- The bulls need a strong bull close today or 2 to 3 consecutive smaller bull bars closing above their midpoints to convince traders the market is always in long.
- The bears are hopeful this rally will lead to a second leg down from the March 31 selloff and a breakout below April 14.
Summary of today’s S&P Emini futures price action and what to expect tomorrow
- Al will post chart after the close.
Al created the SP500 Emini charts.
End of day summary
- The bears got a trend from the open bear trend today.
- Today opened around 4,500, which was a 50% pullback of the March 31 selloff on the daily chart.
- The bears ended up getting a small pullback bear trend day that lasted all day.
- By 7:20 PT, the market was probably Always in short, but not by much. The odds favored a second leg down. However, the moving average was just below, which increased the odds of buyers coming in soon.
- The bears ended up getting a breakout gap below the 7:30 PT low, which trapped bulls who were buying lows and scaling in lower. Those scale-in bulls had to sell out with a loss around 8:30, and they would not look to buy again for at least a few legs down.
- Overall, the channel down was so tight that all of the reversals up were minor, and the best the bulls could hope for was a trading range. This means traders will sell pullbacks betting that most reversals would fail all day today and, worst case, the market would go sideways, allowing those bears to make a profit.
- Today is a good reminder of how long a trend can last and to be careful about betting on reversals.
- Overall, the bears have a huge bar on the daily chart and hope they can get follow-through tomorrow. Tomorrow will likely be disappointing for the bears and a reminder that the market is in a trading range. Trading ranges constantly disappoint traders, just like how today disappointed the bulls on the daily chart.
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.
Thanks Brad for the analysis! The BO below of yesterday (20th April) turned out to be the MM to the day’s high. An astounding 130 points in total range! I would like to know: if, once the outside bar (daily chart) gets follow through, is a MM on this basis an expected target on that very day? (Obviously I was (literally) floored by this freefall drop). Thanks a lot again!
Thanks for the report. Given the Outside down bear bar on the daily chart, does the working assumption that April 12th low is the low for the next few weeks is still in tact?
Thanks for your analysis, Brad.
Why were you expecting a trading range open & limit order market? Thanks.
The daily chart is in a trading range, and the market was likely to open at 4,500, which is a 50% pullback from the March 31 selloff on the daily chart, so it increased the odds of going sideways.