Trading Update: Thursday August 11, 2022
Emini pre-open market analysis
Emini daily chart
- Emini testing year midpoint. The market closed above the June 2 high yesterday, which is good for the bulls.
- The next target for the bulls is the 50% pullback of the January 2022 high and the June 17 low, which is around 4,2220. The market will likely have to get there today or tomorrow.
- The bulls have had a small pullback bull trend since the rally began on July 14. It is essential to realize all the gaps the bulls have been able to form, such as the gap between the July 22 high and the August 3 low.
- While it is possible the market gets a measured move up from the gap, the bulls will likely become disappointed soon with trading range price action.
- At the moment, the odds favor a test down to 4,000 before a test up to 4,300; the bears need the market to go sideways more and develop more selling pressure.
- While the rally up from the July 14 low is probably a bull leg in what will become a trading range, one has to be suspicious of the open gaps. Small pullback trends always start as legs in a trading range that form gaps, so this could go a long way up if it is a small pullback bull trend.
- The bull’s next target is the top of the bull trend line, around 4,350.
- The bears want the market to begin to go sideways and form a double top with the June 2 high. Next, the bears will want to start closing gaps below and reach 4,000. Ultimately the bears want a strong selloff down to 4,000 and a break below the neckline of the June 17 low.
Emini 5-minute chart and what to expect today
- Emini is up 28 points in the overnight Globex session.
- The market has been in a bull channel since yesterday’s CPI report. The channel is beginning to go sideways and form a trading ring around the midpoint (4,220) of the year’s range.
- Traders should pay attention to the 4,220-price level mentioned above as it may be a magnet all day.
- Traders should expect a trading range open and limit order trading until there is a credible top/bottom, or a breakout with follow-through.
- Traders need to be careful on the open since there are often several reversal attempts before one is successful. It is easy to take one or two big losses on the open and spend the rest of the day trying to get back to breakeven.
- If one has trouble on the open, they should consider waiting for 6-12 bars before placing a trade. Most of the time, the market goes sideways for the first hour, so the risk is small regarding missing a big move.
- Traders can also consider waiting for a credible stop entry such as a double top/bottom, wedge top/bottom, or a credible breakout with follow-through.
- As Al often says, “price is truth”. Do not be in denial of what the market is doing and what you hope the market is going to do.
- The odds favor a trading range day so that traders will pay attention to the open of the day.
- If today is going to be a trend day, there will be plenty of opportunities to trade the trend once the market breaks out.
Yesterday’s Emini setups
Al created the SP500 Emini charts.
EURUSD Forex market trading strategies
EURUSD Forex daily chart
- The market reached the 2017 low yesterday and found profit taking back.
- Yesterday’s bar closed at its midpoint, which is a sign of weakness; however, the bulls will try and close today’s bar on its high and above the 2017 low.
- The market will likely have to reach the May to June lows which are not far above.
- The bulls have a breakout above the tight trading range that began around mid-July. Since a bull breakout of a trading range is an upside breakout of the neckline of a double bottom, the bulls want a measured move up from the tight trading range, which projects up to the July 5 low.
- July 5 is a reasonable target for the market to test. This is because July 5 was the breakout bar below the May to June trading range, and traders will want to see if there are sellers again at the high of July 5.
- The bears see the current test of the 2017 low as a large two-legged pullback; however, there are a lot of bull closes, and bulls are beginning to close above the moving average.
- The May to June trading range was likely a final flag, which means traders expect the market to test back to the middle of the trading range at a minimum.
- Overall, today is an important day for the bulls. The bulls want to get a second bull bar closing on its high and above the 2017 low. Bears want today to close as a disappointment bar, reminding traders that the market is still in 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 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.