Trading Update: Monday April 18, 2022
Emini pre-open market analysis
Emini daily chart
- The bulls are trying to form a wedge bull flag (April 1, April 6, and April 13) and want failed breakout below wedge bottom.
- The bears went outside down following the credible stop entry buy on April 13. This increases the odds that the market gets a bear breakout below the wedge bull flag.
- The daily chart is in the middle of a trading range and at the 4,400 big round number. It is essential to realize that the probability of both the bulls and bears is close to 50%, which means this is not a great area to initiate trades.
- The bulls will try and prevent the bears from getting a measuring gap and measured move down from the March 29 – April 13 bull flag.
- The bears hope to get consecutive bear breakout bears which might be enough to drive the market back down to the February 22 lows.
- It is still possible that the bulls are able to set up a higher low major trend reversal this week. This could lead to a test back up to the March 29 high and the all-time high.
- March 29 was a credible buy the close bar (although very climactic), and the market did not let buy the close bulls out who bought the March 29 close. This increased the chances that the market will have to test back up to the March 29 close.
- Overall, traders should expect more sideways over the next couple of days as traders decide on the bear breakout or a test back up to the March 29 close.
Emini 5-minute chart and what to expect today
- Emini is down 10 points in the overnight Globex session.
- The market has been channeling up in the Globex session.
- Traders should look for today to close above the open and form a bull body on the daily chart. This means that traders will look to buy weak bear selloffs, betting that the bears will fail to get a strong bear breakout.
- It is important not to be in denial of a strong bear breakout. The odds favor a bull close today. However, the bears still have a reasonable chance of a bear close.
- As always, traders should look for a credible stop entry buy such as a double top/bottom or a wedge top/bottom, or traders can wait for a strong breakout with follow-though.
- Most traders will be better off waiting for 6-12 bars before doing anything. This is because it often has a lot of limit order trading on the open, which means traders can easily get trapped into buying too high or selling too low and taking a big loss.
Thursday’s Emini setups
Al created the SP500 Emini charts.
EURUSD Forex market trading strategies
EURUSD Forex daily chart
- The EURUSD traded below Friday’s low and will probably try and rally today.
- The bears broke below the March 7 low last Thursday (April 14). However, the bears failed to close below March 7.
- The bulls will likely give up here soon, and the market will begin to go sideways to up.
- The bulls will buy here, betting that the market will not fall below the April 14 low and will form a micro double bottom with a bull bar closing on its high.
- The bulls also have a credible buy signal bar with the April 13 high, so the market will probably have to get back to it. This is because bulls likely bought April 13 high and were willing to buy below the bar as well, confident they could exit back at the April 13 high.
- The bears hope that last Friday is a pullback from the bear breakout. While this is possible, it is less likely than the failed bear breakout below the March 7 low.
- Traders should look for the market to close as a bull trend today. This means that bulls will look to buy any weak bear sell-offs during the day session, as well as look to buy any strong bull breakout with follow-through.
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 Emini opened with a big bar 1 that led to a trading range for the first 2 hours.
- When the day’ is the exact low or high of the day, there is a very high probability that the market will fall below/above the opening tick and create a tail. Look at the daily chart and try to find a day where the open is the exact low or high of the day, and you will have a hard time finding one.
- 50% of the time, you get a major reversal on the open, and an 80% chance you get a minor reversal on the open. After bar 3, there was at least an 80% chance of a minor reversal down and a 50% chance of a major reversal down.
- The bulls tried to form a higher low major trend reversal around 7:15 PT, but the rally led to a trading range. It is important to remember most major trend reversals are minor and lead to sideways trading.
- The bears ended up getting a bear breakout below a bull flag around 8:20 PT, leading to a measured move down of the bull flag and a test of the open of the day.
- Since the first 3 bars of the day were big bull bars, it was likely that any bear breakout below bar 1 would fail and lead to more sideways trading.
- The bull got a reversal up around 9:45 PT (bar 39), and it led to a large rally back to a new high of the day. Often on a trading range day, there is a reversal around bar 40.
- The bears tried to get a bear flag around 10:30. However, the bulls got an upside breakout of the bear flag, common in trading ranges. The bulls tried several times to get a bull breakout above bar 3 and failed to close on its high, leading to a deep pullback around 12:45.
- The bulls get a surprise in the final few bars of the day and close near their high.
- Overall, today was a trading range day. It is important not to buy too high and sell too low. Often the breakouts look strong at the time and look like they will successfully breakout of the trading range, only to fail and trap traders.
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.