Trading Update: Wednesday August 11, 2021
Emini pre-open market analysis
Emini daily chart
- New high yesterday, but closed below the old high from Friday. Bear body, but small so low probability sell signal bar for micro double top with Friday’s high.
- Emini bulls want to test channel top at 4460.
- Yesterday was a 2nd consecutive small doji bar after Thursday’s small breakout above the 10-day tight trading range.
- While this is weak follow-through after a small breakout, the absence of a reversal down makes at least slightly higher prices likely.
- The bulls want the rally to break above the top of the bull channel, which is currently around 4,460.
- However, a breakout above a bull channel has a 75% chance of starting to reverse within about 5 days. Consequently, as strong as the yearlong rally has been, there should be some profit taking soon. It could come from below the top of the channel. The upside is probably small over the next month.
- The monthly chart currently has 7 consecutive bull bars. That has only happened twice in the 25-year history of the Emini.
- Furthermore, there has never been eight. Therefore, August or September should be a bear bar. That increases the chance of a reversal down at any point.
- However, the best the bears can probably get is a 15 to 20% correction over a few months. The bulls will buy the 1st reversal down in a strong bull trend, even if that reversal is big.
Emini 5-minute chart and what to expect today
- Emini is up 10+ points in the overnight Globex session. It rallied sharply on the CPI number report. Today could gap up to another new high.
- While markets have inertia and tend to continue what they have been doing, 3 small sideways days is unusual. That increases the chance of a breakout in either direction today or soon.
- It is important to understand that a strong breakout increases the chance of a trend day, but breakouts often fail and reverse.
Yesterday’s Emini setups
EURUSD Forex market trading strategies
EURUSD Forex daily chart
- Yesterday was 2nd consecutive bear bar closing below July 21 low. That confirms the breakout and increases the chance of at least slightly lower prices.
- The bears want a 150 pip measured move down from the July6/July 30 double top bear flag. That target would be just above the bottom of the yearlong trading range at around 1.16. The bottom is the November 4 low of 1.1603.
- Today so far is reversing up sharply from 2 pips above the March low. The bulls want a double bottom.
- The 2-week sharp selloff would then simply be a sell vacuum test of support instead of the start of a move down to the November low.
- With the 2-week selloff as strong as it has been, the bulls might need a micro double bottom before they can begin a trend up.
- Traders should find out this week if this is going to be a double bottom or a pause in a bear trend.
Summary of today’s S&P Emini futures price action and what to expect tomorrow
End of day summary
- Reversed down from above yesterday’s high, which was the all-time high.
- The selloff was weak and therefore unlikely to last all day.
- Reversed up from a wedge bottom, just above the 60 minute EMA (not shown).
- The rally was weak and therefore unlikely to lead to a strong bull trend.
- Today was a bull trend reversal day and a trading range day.
- It was the 4th consecutive small day with a lot of sideways trading, and the 3rd consecutive doji bar.
- The bars are drifting higher with no sign of a top. With today closing at a new all-time high, the odds favor at least slightly higher prices tomorrow.
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.