End of day comments about today’s Emini price action and day trading
The Emini has been in a bear channel for about 8 days, and it is at the bottom of a month long trading range. It reversed up from below yesterday’s low with an expanding triangle bottom, which is a type of lower low major trend reversal. It then had a higher low major trend reversal. The low of the day was 8 points below the open. This made today unlikely to be a bull trend day because very few bull days have tails on the bottom of their bars that are 8 points tall. A trading range day was therefore more likely.
S&P500 Emini intraday market update for price action day traders
Time of update 7:39 a.m. PST.
Yesterday (Friday) ended with a reversal up from a strong bear channel, and today started with a bull trend reversal from below yesterday’s low.
There were many big bull trend bars with closes near their highs in the final few hours. This means that the bulls feel this is a good price level for buying. The reversal was also at the bottom of a 60 minute wedge bull flag. This increases the chances of a second leg up after any pullback. The bulls will try to convert any pullback into a higher low major trend reversal and then they will try to test the 60 minute moving average. The bears want a breakout to a new low of the day and then a measured move down from the double top (the top of the trading range from yesterday). Since the follow-through up and down has been bad, a trading range is most likely. However, the reversal up is enough for traders to have a bullish bias until the bears can create a strong bear breakout.
The Emini tested yesterday’s low, which was last week’s low, on the open. It reversed up from an expanding triangle bottom, which is always a lower low major trend reversal.
S&P500 Emini 60 minute, daily, weekly, and monthly candle charts
The daily and 60 minute Emini charts are in endless pullback mode. This means that they are still forming bull flags, but they might have a bear breakout. If one forms, it will probably become a measuring gap.
The Emini is probably waiting for Wednesday’s FOMC meeting. This could be the excuse for the breakout up, down, or both. Since the monthly Emini chart is so overbought, if there is an upside breakout, it probably will fail and be followed by a reversal down. In either case, a trading range on the weekly chart is likely, and the bottom of the range will probably be near the August low around 1900.
See the weekly update for a discussion of the weekly chart.
Al, I don’t look to scalp when entering a trade but I enter with 4 contracts with 3 targets; first 2 close at 1 pt profit, then 1 at 2 pts and the final contract is my swing. Of course I’m moving my stop as price moves, locking in profit along the way. I would value any thoughts you might have on this?
That is the hardest part of trading and one of the reasons why most traders should focus on swings. The highest probability is during strong breakouts (not rallies within trading ranges). Next, pullbacks in trends that respect the moving average. There are countless other, and I talk about some every day in the Trading Room.
I am learning one point scalping. Can someone give some pointers on how to determine when probability of a setup is high enough to trade the scalp?