Emini bears need more bear days if this is start of 15% September correction

Trading Update: Monday September 13, 2021

Emini pre-open market analysis

Emini daily chart

• Emini bears sold off for 5 days, which is relatively a lot compared to other pullbacks since the pandemic low.
• Next week’s FOMC announcement will be important. That increases the chance of the Emini starting to go sideways.
• Next magnet below is the bottom of the bull channel, which is just a few points below Friday’s low.
• September or October should be high of year and start of 15 to 20% correction. There is a 40% chance it has already begun.
• There have been many selloffs comparable to this one since the pandemic low. The bulls bought each one, and they will probably buy this one as well.
• It has been strong enough so that the bulls will probably need a micro double bottom this week before they can get back to a new high.
• Might get sharp acceleration up to above 4600 before correction begins, possible after the September 22 FOMC meeting. If so, that would probably be a blow-off top.
• Next 15% move should be down instead of up.

Emini 5-minute chart and what to expect today

• Emini is up 30 points in the overnight Globex session.
• Friday was a sell climax day. About 50% of the selling was likely caused by the gamma effect and option selling firms, and only 50% is from institutions selling stock.
• The day after a sell climax day has only a 25% chance of being another big bear day.
• There is a 75% chance of at least a couple hours of sideways to up trading that begins by the end of the 2^nd hour.
• Magnets above are the 10:15 pm PT lower high (which was the start of the late sell climax), and the 60-minute EMA, the 20-day EMA. They are all between 4470 and 4490, which is where the Emini will likely open today.
• With Friday being a very big day and today opening in the middle of Friday’s range, there is an increased chance of today being an inside day. It will probably mostly overlap Friday’s range, which means it should have a difficult time getting much above Friday’s high or below Friday’s low.
  

Friday’s Emini setups

Here are several reasonable stop entry setups from Friday. 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

• As expected, there were sellers above Thursday’s high, after 3 bear days.
• The bears hope that the reversal down from a double top with the July 30 high will lead to a resumption of the bear trend.
• Getting 2^nd leg down for several days from September 3 parabolic wedge top.
• There is almost a 60% chance that this 7-day reversal down is minor, but it might reach the August 27 buy climax low before the bulls return.
• Bulls want a higher low major trend reversal to form over the next couple weeks. That would also be the right shoulder in a head and shoulders bottom.
• They then want a breakout above the July 30/September 3 double top and a measured move up.
• The bears want the July 30/September 3 double top to lead to a break below the August 20 neckline, and then below the November 4, 2020 bottom of the yearlong range.
• Since the bull channel to the September 3 high was tight, the bears will need a couple consecutive bear days to convince traders that the bear trend is resuming.
• Sideways for 3 months with no evidence that this is about to change. Reversals every week or two.
• Only 40% chance of either strong breakout above September 3 high or below August 20 low within the next several weeks.

Summary of today’s S&P Emini futures price action and what to expect tomorrow

End of day summary

• Bear Trend From The Open. Only 1 bull bar in first 11 bars so aggressive bears.
• Evolved into trading range.
• Late reversal up from failed breakout below triangle. The low was just below the bull trend line on the daily chart.
• Oversold on daily chart and at bottom of bull channel so should bounce for at least a couple days.

See the weekly update for a discussion of the price action on the weekly chart and for what to expect going into next week.

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Trading Room

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Charts use Pacific Time

When I mention time, 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.

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