Emini September rally needs to continue to avoid forming a lower high

Trading Update: Thursday September 23, 2021

Emini pre-open market analysis

Emini daily chart

• Big reversal up after big reversal down creates big confusion. That typically results in a trading range.
• Increased chance of a trading range over the next couple weeks. A trading range usually has at least a double top and a double bottom.
• Bulls want the strong reversal up from 100-day MA, the September low and the 4300 Big Round Number to be a V-bottom. They want the rally to quickly go to a new high.
• The bulls want the week to close near its high so that this week will be a strong buy signal bar on the weekly chart. That would increase the chance of higher prices next week.
• If the Emini September rally continues for several more days, the rally will probably continue up to a new high.
• After 7 consecutive bull bars on the monthly chart, there should be a couple consecutive bear bars starting in September or October.
• That would likely end the Small Pullback Bull Trend on the weekly chart. That means there should be a pullback that is at least 50% bigger than the biggest prior pullback, which was a 10% pullback in October 2020. Therefore, there should be at least a 15% pullback.
• There is currently a 50% chance that the pullback has begun. The more big bull bars over the coming days, the more likely the Emini will soon make a new high.
• If it does, then the August trading range will probably be the Final Bull Flag on the daily chart. Then, the 15% correction should begin in October.
• Less likely, the bulls will get 8 or more consecutive bull bars on the monthly chart, which has never happened in the 25-year history of the Emini.
• The open of the month is probably too far above for the Emini to get there next week, the final week of September.
• September should have a bear body. However, the bulls will try to have it close above the midpoint of the month. If so, it would increase the chance of October being sideways instead of down.

Emini 5-minute chart and what to expect today

• Emini is up 15+ points in the overnight Globex session. It is possibly continuing its strong reversal up.
• If today gaps up above yesterday’s high, and if gap is small, it will probably close early in the day.
• Over the final week of September, traders will begin to think about monthly support and resistance. At a minimum, the bulls want September to close above the midpoint of the month, which is just below Friday’s low and just above yesterday’s high.
• Since traders are deciding if September will be the high, what happens over the next few days will be important.
• If the bulls continue to get bull days, the rally will probably lead to a new high.
• If the Emini will be sideways or down over the next few weeks, the bulls should be disappointed today or tomorrow. That means a bear day.
• If there are two or more bear days within the next few days, the Emini will probably be sideways into the end of the month.

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

• The EURUSD formed an outside down bar yesterday.
• Today so far is a bull day. The more it closes on its high, the more reliable a buy signal bar it will be.
• There is a micro double bottom with the September 20 low.
• Also, it would be a High 4 bottom. There was a High 2 attempt on September 13, then a big bear breakout, and this would be a 2nd High 2 attempt with the September 20 low.
• A reversal up from here would be a higher low major trend reversal.
• Since the bear channel over the past 3 weeks is tight, the first reversal up would probably be minor and last only a few days. The bulls want the week to close above the open so that this week would be a buy signal bar on the weekly chart.
• The bears will sell a 1- to 3-day bounce, hoping for a micro double top with yesterday’s high.
• The bears need a bear follow-through day tomorrow after yesterday’s big outside down day if the selloff is to go much lower. The momentum down is enough so that there is a 50% chance that the selloff will break below the November 4, 2020 low.
• But it is at the bottom of a 4-month trading range on the daily chart.
• It is also at the bottom of a yearlong trading range on the weekly and monthly charts.
• Since trading ranges resist successful breakouts, there should be buyers around the current level and just below last year’s low, which is the bottom of the yearlong range.
• If the bears get consecutive big bear bars closing on their lows and below that November low, traders will conclude that the trading range has ended on the weekly chart and that the EURUSD has evolved into a bear trend. It has been in a bear trend on the daily chart since May.
• The bulls need at least a couple big bull bars closing on their highs before traders will conclude that a swing up to the September high is underway.

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

End of day summary

• Bull Trend From The Open to far above 50-day MA.
• After breakout phase, there was double bottom bull flag and a triangle. This led to a bull channel to just below the measured move target based on the height of the Triangle.
• The Emini had a midday reversal down from a parabolic wedge buy climax.
• 99.95% of days have at least 3 bars with lows below the EMA, which happened today.
• 75% of the time, there is then a test of the day’s high after the 20-Gap Bar buy setup. That did not happen today.
• Also, 60% chance Moving Average Gap Bars in a bull trend will lead to a test of the high. That also failed.
• Instead, the selloff to the EMA was also a test of the apex of the earlier triangle. The reversal down was a Midday Bear Trend Reversal, and not just a minor reversal down to the EMA.
• On the daily chart, 4-day rally, but lacked consecutive big bull bars closing on their highs. It therefore looks more like a leg in a trading range than a resumption of the bull trend.
• If there are several bear bars over the next several days, the odds that the 15% correction has begun will remain at 50%.
• If the bulls begin to get bull bars closing near their highs, the 18-month bull trend would then likely be resuming. The odds of a new high before a 15% correction would go up to 60%.

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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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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