Trading Update: Wednesday September 15, 2021
Emini pre-open market analysis
Emini daily chart
- Emini at bull trend line with yesterday the 4th consecutive big bear bar in the 2-week selloff. That is unusual, and it therefore today should form a bull bar.
- The Emini will probably soon stop going down and begin to go sideways into next Wednesday’s FOMC announcement. That means it should soon go sideways to up for a few days.
- It is just above the 50-day MA and it might have to fall a little further first. It could also test the August 19 higher low.
- Most recent days had early selloffs. If there is an early selloff today, there will probably be a reversal back up and close above the open.
- The Emini closed below the daily bull channel again yesterday. Traders are deciding if the Emini will finally break far below the channel and evolve into a trading range. A 2nd consecutive close below the channel would increase the chance of lower prices over the next few days.
- The Emini should begin a 15% correction in September or October. It might have already begun.
- There is a small chance of a collapse far below the bull trend line over the next 2 weeks. Next week’s FOMC report could be the catalyst.
- While trends resist change, there are factors that I have discussed in the weekend blogs that are increasing the chance of the bull trend on the daily chart reversing down for a couple months.
- There is now a 50% chance that the September 2 high will remain the high for the rest of the year.
- The September 2 high was just slightly above the measured move based on the height of the pandemic crash.
- Because of the unusual streak of bull bars on the monthly chart, there should be a couple consecutive bear bars starting this month or next.
- That should result in at least a 15% correction before the end of the year.
- The Emini should fall 15% before rallying 15%.
Emini 5-minute chart and what to expect today
- Emini is up 5 points in the overnight Globex session.
- Yesterday sold off in a Spike and Channel Bear Trend. There is therefore a 75% chance of a couple hours of sideways to up trading that begins by the end of the 2nd hour.
- The channel typically ends up being a bear leg in what will become a trading range. That channel is 30 points tall.
- If today rallies, it could take hours to get back to the start of the channel, just above 4450 and around the 60-minute EMA.
- There is a 25% chance of a strong break below yesterday’s wedge bottom and then a 30-point measured move down.
- The Emini has sold off relentlessly to the bottom of the daily and weekly channels. Also, it is just above the 50-day MA, which has been reliable support for over a year.
- The Emini will probably bounce for several days starting today or tomorrow. It might test the 4500 Big Round Number before the FOMC meeting.
- A bear trend should begin within a month. It might have already started. That increases the chance of a surprisingly big bear day in an oversold market.
Yesterday’s Emini setups
EURUSD Forex market trading strategies
EURUSD Forex daily chart
- Yesterday triggered a High 2 bull flag buy signal, but Monday had a bear body and it followed a bear bar on Friday. Also, the bear channel from the September 3 high was tight. This was a weak buy setup.
- There were sellers above Monday’s high, and yesterday closed back near the open. A doji bar is a weak entry bar.
- A weak entry bar and a weak buy signal usually does not lead to a strong trend.
- So far, today is a bull bar, but the EURUSD has been in a tight trading range for 6 days. Traders are deciding if the selloff from the September 3 high is a pullback from the August 20 rally or a resumption of the bear trend that began in May.
- 6 of the past 8 days have had bear bodies, although most were small and had prominent tails. This is therefore not as bearish as it could be.
- The late August rally was strong, and it began at the bottom of a yearlong trading range.
- The 7-day selloff was weak, and it looks more like a pullback in a bull trend than a resumption of the bear trend.
- The strong rally from support and the weak reversal down makes it more likely that the selloff will form a higher low. Traders should expect a test of the September 3 high.
- But because the EURUSD is in the middle of a 4-month trading range, the probabilities cannot strongly favor the bulls or bears. The chart is only slightly more bullish than bearish. That could quickly change with a couple big bear days closing near their lows.
- All financial markets might be sideways into next week’s FOMC announcement. It could lead to a strong move in either direction.
Summary of today’s S&P Emini futures price action and what to expect tomorrow
End of day summary
- Major Bull Surprise on the open on the 5-minute chart so likely to affect rest of day and possible next several days.
- After triangle, bulls got strong breakout.
- 23-bar bull micro channel was the 2nd most extreme micro channel in 5 years. It was therefore a buy climax, and it led to profit taking and a trading range.
- Bulls expected and got a new high of the day after the pullback.
- Today was a buy climax so should have at least a couple hours of sideways to down trading that starts by the end of the 2nd hour tomorrow. Maybe a pullback to the 60-min EMA.
- On the daily chart, yesterday was first time since pandemic crash with 4 consecutive bear bars. That made it unlikely today would be a 5th consecutive bear bar.
- Today broke above yesterday’s high and formed a 2-bar reversal.
- Today is a buy signal bar for a reversal up from the bottom of the bull channel and from just above the 50-day MA.
- However, after 4 big bear days, the first reversal up might only last 2 to 3 days. The bulls might want a double bottom before trying for a new all-time high.
- That means might go sideways into next Wednesday’s FOMC announcement.
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. I talk about the detailed S&P Emini futures price action real-time throughout the day in the BrooksPriceAction.com trading room. We offer a 2 day free trial.
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.