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Emini sell climax bounced back to 4400 and open of month

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Trading Update: Friday August 20, 2021

Emini pre-open market analysis

Emini daily chart

  • Yesterday was a big bull day after 2 big down days and Emini sell climax.
  • Closed above 4400 and just below open of month.
  • High 1 buy signal bar but tail on top and 2 big bear days so probably only minor reversal.
  • Big Down, Big Up, Big Confusion usually results in trading range.
  • Yesterday tested August 3 low, which was start of bull channel after spike up from July 19 low. When a Spike and Channel Bull Trend tests the start of the channel, there is usually a bounce and a trading range.
  • Reversed up from just above bottom of bull trend line on daily chart. Probably will trade below it soon by going sideways or down.
  • Back in the early August trading range so increased chance of trading range.
  • Bulls want double bottom with August 3 low, but trading range is more likely.
  • Might form trading range around open of month and 4400 Big Round Number through the end of the month.
  • I have been saying since July that the open of the month was going to be the most important magnet because August or September should be a bear bar on the monthly chart. If either is, probably will lead to 2- to 3-month correction of 15 to 20%.

Emini 5-minute chart and what to expect today

  • Emini is up 4+ points in the overnight Globex session.
  • Today will probably open in the middle of yesterday’s range. That increases chance of a lot of overlap with yesterday’s range. That means increased chance of a lot of trading range trading.
  • Increases chance of buyers below around yesterday’s low and sellers above around yesterday’s high.
  • Big bear day unlikely after yesterday’s big rally.
  • Might get 2- to 3-day bounce so increased chance of follow-through buying from yesterday.
  • Today is Friday so weekly support and resistance can be important, especially in the final hour. The most important prices are the open of the month, last week’s low the open of the week (this week is outside down), and the August 3 low.

Yesterday’s Emini setups

EMINI bull trend from the open at bottom of bull channel. Emini sell climax bounce.

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 bear channel working down to November low

EURUSD Forex daily chart

  • Yesterday was bear bar closing near its low. November low at 1.16 and at bottom of yearlong trading range is magnet below.
  • Bulls need reversal bar for High bottom with August 11 low. Without that, should trade lower.
  • While not strong bear trend since June 25 high, the odds favor test of November low before there is more than a 3-day bounce.
  • Might get 3-day bounce soon and then one more new low. If then reversal up, there would be consecutive wedge bottoms, which is a relatively high probability reversal pattern.
  • Bears want strong breakout below yearlong trading range and 700-pip measured move down, but more likely will be buyers below November low.
  • Since near the bottom of the trading range, can reverse up sharply at any time. Traders need to see consecutive big bull bars closing on their highs before they conclude that a reversal up might be underway.

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

Emini bull trend from the open then trading range

End of day summary

  • Bull Trend From The Open.
  • After breaking above the open of the month, last week’s low and the 60-minute EMA, it entered a trading range for a couple hours.
  • Some Trend Resumption up in the middle of the day, but the broad bull channel was also mostly a trading range after the 1st hour.
  • The bulls are hoping that yesterday was just a sell vacuum test of the August 3 low.
  • Today was the 2nd day in the reversal up. The bulls want the rally to continue to a new high next week.
  • The bears want a lower high on the daily chart and then a 2nd leg down. They want the month to close below the open. It would then have a bear bar, which would make 2 to 3 months of profit taking likely.
  • This week was outside down, but it closed near the open. It was a doji bar on the weekly chart. It is therefore neutral. This increases the chance of next week being a 3rd mostly sideways week as we get near the important close of the month.

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.

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