Trading Update: Wednesday August 10, 2022
Emini pre-open market analysis
Emini daily chart
- Update after 5:30 AM PT report: The bulls got a strong close above the August 8th high and June 2 high. Bulls want close above June high today.
- The Emini tested the June 2nd high two days ago, forming a bear bar closing near its low for a wedge top (Aug 1, 3, and 8),
- At the moment, the odds are the market will correct for a couple of legs down; however, traders do not know if the market will try and hold above the June 2nd high before correcting down.
- The bear’s target is the 4,0000 big round number which is also the breakout point from the July 22 high.
- The bull will see any selloff as a pullback from the rally and will try its best to get the upside breakout above the June 2nd high. Next, the bulls would want a breakout above the neckline of the June 2nd high and a measured move up from the double bottom (June 17th). The breakout and a measured move would take the market up to the March 29 high.
- Bears want the opposite. They want the market to form a double top with the June 2nd high, test the neckline (June 17), break below it, and go for a measured move 500 points below the June 17 low, which is unlikely.
- More likely, the market will go sideways and continue the trading range price action. Since the market is likely in a trading range, this means a test of the middle of the range and prior breakout point highs (July 22) are likely to get tested.
- While the bears have a good signal bar on August 8th, they need to do more to convince traders that the market is always in short.
Emini 5-minute chart and what to expect today
- Emini is up 65 points in the overnight Globex session.
- The market had a strong upside breakout on 5:35 AM PT on CPI report.
- This will result in large gap up on the open.
- The bulls will try their best to get today to close about the June 2nd high, and the bears want to have today sell off as much as possible and damage the strong rally up from 5:30 AM PT.
- Traders should pay attention to the first few bars of the day. If they are consecutive strong trend bars, traders will consider entering in the direction of the trend. If the bars are sideways with lots of overlap, traders will assume more trading range will follow.
- The market will gap far above the moving average. This means the market will likely have to pullback and get closer to the moving average, or rallying on the open will probably not last long and will be unsustainable.
- Overall, traders should be patient on the open. The market often goes sideways for the first 6-12 bars, so there is usually no rush to enter the open.
- Traders can consider waiting for a double bottom/top, wedge bottom/top, or a strong breakout with follow-through.
- Again, if there is a bull breakout on the open, traders should be mindful of how far the market may be away from the moving average. The single highest probability outcome in a day is a touch of the moving average therefore, traders should be aware that the market will reach the moving average today. The point is that if the market rallies on the open, it may not last long, and the market will have to test the moving average.
- Lastly, traders should pay attention to the June 2nd high as it will likely be an important magnet today.
Yesterday’s Emini setups
Al created the SP500 Emini charts.
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 broke to the upside after the 5:35 AM PT report. At the moment, it looks like the current bull breakout of the triangle will be successful.
- The bulls have reached the 2017 low, and the market is currently testing the May to June trading range lows.
- Traders will pay close attention to see if the bulls can close the current bar on its high. Next, can the bulls get a strong follow-through bar, increasing the odds of higher prices?
- Overall, this is good for the bulls and increases the odds of higher prices and a test of the July high and the June 27 high. Both of these targets are in the middle of the May to June trading range, another magnet for the bulls.
Summary of today’s S&P Emini futures price action and what to expect tomorrow
Al created the SP500 Emini charts.
End of day video review
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. Al talks about the detailed S&P Emini futures price action real-time throughout the day in the BrooksPriceAction.com on trading room days. We offer a 2 day free trial.
Charts use Pacific Time
When times are mentioned, 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.
