Trading Update: Tuesday October 29, 2024
Emini end of day video review
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S&P Emini market analysis
Emini daily chart
- The Emini formed an inside bar yesterday, closing at its low inside a tight trading range.
- While this is a sign of increased selling pressure by the bears, it is forcing bears to sell in the middle of the tight trading range on the daily chart.
- The bears need to break below the moving average with solid momentum if they will convince traders to sell low in what is likely to be a trading range or a bull flag.
- Ideally, the bears need a bear breakout with follow-through below the moving average to convince traders that the market is Always In Short.
- Without a clear downside breakout, traders will assume that the market will test the 6,000-round number.
- The bulls want a reversal up with today’s bar and for it to close on its high. That would slightly increase the odds of an upside breakout and a test of the 6,000-round number.
- Overall, the market is in a tight trading range late in a bull channel. This lowers the probability for the bulls and increases the risk of more trading range price action continuing.
Emini 5-minute chart and what to expect today
- The market is going to gap down on the open. While this is good for the bears, yesterday is an inside bar on the daily chart, a triangle on a smaller time frame.
- The breakout point of an inside bar typically gets retested within 1-2 bars after the breakout, depending on the context. This means that the odds favor the cap closing on the daily chart.
Emini Intra-Day Update
- Today, it gapped down near the October 25th low and formed a bear bar on bar 1, which closed on its low.
- Bar 1 was a big bar at support, increasing the risk of lousy follow-through and buyers below, which happened on bar 3.
- The bears on bar 3 were disappointed by the lack of momentum after bar 1, and most of the bears bought back sorts at the close of bar 2.
- Bar 3 was a strong enough reversal that the odds favored a second leg up. This is why the market rallied after bar 4.
- Yesterday’s low was a magnet and was likely to get tested (See reasons explained regarding the daily chart).
- As of bar 8, the market is Always In Long. However, the rally has overlapping bars, which is a sign of a weaker trend.
- The market may begin to go sideways near yesterday’s low, which would cause bulls to take profits and look to buy lower.
- The bulls are hopeful that today will go outside up.
- When trading, it is most important to rule out what the day is not likely to do. This way, one can limit the number of decisions they have to make.
- As of bar 9, the market will likely be a bull trend or a trading range.
- Because the higher time frame is in a large trading range, the odds favor the rally above 9 to lead to disappointment and the market to get a pullback. This means swing bulls will consider taking profits and looking to buy lower.
Yesterday’s Emini setups
Al created the SP500 Emini charts.
Here are reasonable stop entry setups from yesterday. I show each buy entry bar with a green arrow and each sell entry bar with a red arrow. Buyers of both the Brooks Trading Course and Encyclopedia of Chart Patterns have access to a near 4-year library of more detailed explanations of swing trade setups (see Online Course/BTC Daily Setups). Encyclopedia members get current daily charts added to Encyclopedia.
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.
Summary of today’s S&P Emini price action
Al created the SP500 Emini charts.
EURUSD Forex market analysis
- The EURUSD failed to get the upside breakout yesterday and formed a weak bull bar closing with a tail above the bar.
- This increased the odds of sellers above yesterday’s high.
- The bears saw last Friday (October 25th) sell a signal bar strong enough in a tight bear channel to get a second leg down.
- This is one of the reasons that today went below yesterday’s low, creating that second leg down.
- The daily chart is still in the tight bear channel, which increases the odds of any reversal, which may be minor and lead to a trading range or a bear flag.
- The downside is probably limited until the market can get closer to the moving average.
- The bulls want a reversal up to the moving average. While a test of the moving average is likely, the market can go sideways at this price level for several bars, bringing the moving average closer to the current price.
- Overall, the odds favor a pullback and a test closer to the moving average.
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
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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.
