Trading Update: Friday October 13, 2023
S&P Emini pre-open market analysis
Emini daily chart
- The Emini pulled back yesterday due to the rally losing momentum. However, the rally that began last week is strong enough for a second leg up after the complex bottom on the daily chart.
- While the rally that began on October 6th was strong, it was within an overall trading range on the daily chart. This increases the risk of a deep pullback.
- Even though yesterday is a big bear bar, the odds favor a deep pullback and second leg up.
- It is essential to realize that the bears who sold the September 29th high and higher made money. This increases the odds of a trading range.
Emini 5-minute chart and what to expect today
- Emini is 13 points up in the overnight Globex session.
- The overnight Globex session sold off, testing near yesterday’s low. It formed a double bottom a few hours before the open of the U.S. Session and has rallied since.
- As always, Traders should assume that the open will have a lot of trading range price action. This means traders should think of an 80% chance of a trading range open and only a 20% chance of a trend from the open.
- This means that most traders should wait 6-12 bars before placing a trade unless they are comfortable trading with limit orders and making fast decisions.
- Most traders should try and catch the opening swing that often begins before the end of the second hour. It is common for the market to form a double top/bottom or a wedge top/bottom before the opening swing begins.
- Today is Friday, which means weekly support and resistance is essential. The bulls have a bull bar closing above its midpoint on the weekly chart. Bulls want today to form as big of a bull close as possible, and the bears want to create a big tail on the weekly chart.
- It is possible the midpoint (4367.5) of the week will be a magnet for the rest of the day.
- Since today is Friday, traders should be prepared for a possible surprise breakout up or down late as institutions decide on the week’s close.
Emini intraday market update
- The Emini gapped and rallied on the first two bars before forming a micro double top (bar 6), leading to a selloff.
- The bears have a bear breakout on bar 9, which is probably enough to make the market Always In Short and increase the odds of a second leg down. However, it is also a possible sell vacuum test of yesterday’s close. This means the bear breakout on bar 9 might be a trap, trapping bears into selling low in a trading range.
- As of bar 10, the bulls do not have a decent reversal bar to buy. This means that the bears still have the advantage of lower prices and a second leg down.
- Traders should be mindful that the selloff down to bar 11 has a lot of overlapping bars, which increases the odds of a trading range forming soon and the selloff not lasting all day.
- As of bar 15, the market is Always In Short and the bears want to get down to Yesterday’s low. Because of the buying pressure on the open and around bar 13, the odds favor sideways soon.
- The bulls need to develop more buying pressure if they are going to get a reversal. Until then, it is best to assume that any reversal up will be minor and lead to a trading range and not a strong reversal.
Yesterday’s Emini setups
Al created the SP500 Emini charts.
Here are 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 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.
EURUSD Forex market trading strategies
EURUSD Forex daily chart
- The EURUSD sold off after testing the May 31st and September 29th low.
- The Bulls did a good job getting a reversal up over the past week. However, I mentioned that the market yesterday was barely Always In Long.
- The bulls needed 1-2 strong bull closes above the moving average before traders would be convinced that they had taken control.
- Traders knew that the bulls needed 1-2 more bars, and because of that, bears will sell, and bulls will begin to take partial profits, anticipating the buying pressure stalling.
- Yesterday was a strong enough surprise to make traders think a second leg down is likely.
- However, the selloff below yesterday’s low will probably lead to a trading range and not a measured move down of the past eight days.
Summary of today’s S&P Emini price action
Above chart shows an alternative approach to marking up trade entries.
End of day video review
Video review to follow on YouTube. Stay tuned.
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
Al Brooks and other presenters talk about the detailed Emini price action real-time each day in the BrooksPriceAction.com 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.
