Trading Update: Wednesday October 13, 2021
Emini pre-open market analysis
Emini daily chart
- Trading range since September 20 low. There is a lower low double bottom (September 20/October 4) and a lower high double top (September 23/October 7). In middle of September/October trading range.
- Breakout Mode, which means 50% chance of successful bull breakout and 50% chance of successful bear breakout.
- Because of weekly and monthly chart buy climaxes, there is currently a 50% chance that the Emini began a 15% correction with the September 2 high.
- 3-day selloff to middle of trading range.
- Bulls see the selloff as a double bottom pullback (a pullback from the reversal up from the double bottom), but they need a reversal up this week.
- Bears see the selloff as a reversal down from the double top, but they need more bear bars.
- October 7 high did not quite reach 50-day MA. In a trading range, legs usually reach important support and resistance. Many traders do not believe the 50-day MA was adequately tested. Emini might have to reach it before the bears will consider selling aggressively.
- 3 days down in a trading range is becoming excessive. This increases the chance of a reversal up today or tomorrow, and it reduces the chance of another strong bear day today.
- If instead the Emini continues to sell off, especially with big bear days closing on their lows, the odds of a successful breakout below the double bottom will go up.
- At the moment, the market is neutral while traders decide on the direction of the next big move.
Emini 5-minute chart and what to expect today
- Emini is up 3 points in the overnight Globex session.
- Yesterday’s early trading range was an area of agreement. Since it was late in a bear trend, it will probably be the Final Bear Flag. Today might get stuck there for several hours.
- That trading range is also just below the magnet of the 60-minute EMA.
- While it is possible for today to be a 4th big bear day, that is unlikely since the market is in a month-long trading range. Four consecutive days strongly in one direction would be unusual.
- Therefore, today will probably be sideways to up, or only slightly down. Traders will be more willing to buy reversals up from selloffs.
Yesterday’s Emini setups
Here are several reasonable stop entry setups from yesterday. 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
- Today so far is a bull inside day after consecutive bear days in a 6-week tight bear channel.
- There is now a micro wedge with the September 20 and October 6 lows. The 1st reversal up in a tight bear channel is typically minor.
- However, the daily chart is oversold and almost at important targets below. That increases the chance of a reversal up to above the August 20 low at any time.
- I have been saying that the EURUSD probably will have to dip below the March 9, 2020 high because that was last year’s breakout point.
- The EURUSD has been in a trading range for 7 years. When in a trading range, a market typically falls below support before rallying.
- The June 10, 2020 high of 1.422 is also a breakout point and a magnet below. Additionally, it is at a measured move down from the July 30/September 3 double top. Since there are 2 reasons to get there and the momentum down is strong, the EURUSD will probably test it as well.
- When a market reaches a measured move below a double top bear flag, profit takers typically come in. There will probably be at least a 2-week rally from the breakout points at around 1.15 or 1.14.
- It is important to note that this week so far is the 6th consecutive bear bar on the weekly chart. A streak of that duration has not happened in 3 years. There have not been 7 consecutive bear bars since 2014. Therefore, the weekly chart should have a bull body either this week or next week.
- If it comes after dipping below the March 9, 2020 breakout point, it could be the start of a rally over then following few weeks.
Summary of today’s S&P Emini futures price action and what to expect tomorrow
End of day summary
- Sold off in a sell climax on the open. Usually results in either trading range, or a bull trend reversal and a test of the high of the open, like today.
- When bull trend reversal, like today, usually will have hard time getting far above earlier high.
- Today is High 2 buy signal bar on daily chart, but a bull doji bar after 3 bear days, so might have to go sideways for a few days.
- I have been saying that last Thursday’s high did not quite reach the 50-day MA and that many traders therefore believe the MA was not adequately tested. It is an important magnet above.
See the weekly update for a discussion of the price action on the weekly chart and for what to expect going into next week.
Trading Room
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.
what is the price point of the 50day EMA, what is the magnet?
On the daily chart, the 50-day MA has been reliable support for over a year. It broke below it in September, but reversed up at the 100-day MA.
I do not believe the 50-day MA was adequately tested last week. That is why I have been saying that this selloff should fail. The Emini should get back to the 50-day MA.
The 50day EMA on my chart is at 4389, but I think something is off, today it seems to be a strong bull from above the 50day EMA that is why I am wondering about the price area, I want to compare to my chart.
I use the day session and a simple MA. The Emini reached it today, October 14, 2021, at around 4,424.
Strange. I’m using Thinkorswim and for me day session SMA50 is 4435 and Globex SMA50 is 4424. And SMA SPX is 4436
I use continuous charts. Thinkorswim probably uses the December contract.
Looks like next target is the sept 23 high around 4455 double top?
Hi Al,
It seems to me that trading with limit orders at the open is not a good idea. Even if the first bar was a doji, even if yesterday was a trading range day, the market can still have wild swings and it can go through moving averages or other support like they are not even there.
Most traders should focus on stop orders. On the open, bars and legs are often big. Beginners tend to trade positions that are far too big. That is very dangerous with limit orders. Whatever size a trader thinks is small enough is probably still 2 – 4 times too big.