Trading Update: Tuesday August 30, 2022
Emini pre-open market analysis
Emini daily chart
- Yesterday was a disappointing bar for both the bulls and bears.
- The market will likely bounce here as bears take partial profits and may test the 4,100 area. This is because the risk is big for the bears, so they will likely reduce their exposure taking profits and looking to sell higher.
- There bulls have a bad buy signal bar above yesterday’s high, which increases the odds of sellers above.
- The problem with the bear case is that yesterday was a pause bar, meaning traders were not eager to sell following Friday’s bear bar. One can argue that the gap down yesterday was good enough follow-through for the bears, and while that is possible, the bears still would have rather seen today close on its low as well.
- Most bears, since the market is in a trading range, know they have a reasonable chance of being able to sell a pullback if they are patient.
- Last Friday is a surprise bar, and the odds favor the 2nd leg down. However, one must consider the risk/reward of selling last Friday’s close.
- While some bears will sell last Friday’s close, they know the reality is that there are probably sellers above last Friday’s high as well. This makes putting a stop above last Friday, not an ideal location, and if anything, bears may be willing to sell more above last Friday’s high. This is partly why traders may wait to sell a pullback here, and the market might bounce.
- The market is very close to the 4,000 big round number and will likely have to reach it soon. This increases the odds that the upside is limited until the market gets down to the 4,000 area.
- The bulls will likely need a micro double bottom before they have a reasonable chance at getting a swing up.
- Overall, yesterday is a reminder that the market is still in a trading range and confusing. The market will likely bounce over the next few days as traders test the 4,100-price level and the August 24 breakout gap.
Emini 5-minute chart and what to expect today
- Emini is up 14 points in the overnight Globex session.
- The Globex market has been in a broad channel on the higher time frame since Sunday night.
- For the reasons stated above (daily chart), the bulls want today to be a bull trend day to disappoint bears on the daily chart further.
- As always, traders should expect the open to have a lot of trading range price action (limit order market).
- Most traders would be better off waiting for 6-12 bars before placing a trade since the odds are the open will have lots of reversal attempts.
- A trader can also consider waiting for a credible stop entry such as a double top/bottom or wedge top/bottom.
- Lastly, a trader can wait for a credible breakout with follow-through.
- The most important thing on the open is to be patient and not be in a rush. The biggest reason trades lose money is that they are often too eager to trade and take too many trades with poor math. This is why Al is constantly saying to focus on getting rid of the “Dumb Trades” (bad math trades).
- Overall, traders should be open to anything today, and while the odds may slightly favor a bounce and a close above the open of the day, the opposite could also happen.
Yesterday’s Emini setups
Brad created the SP500 Emini chart.
EURUSD Forex market trading strategies
EURUSD Forex daily chart
- The bulls triggered yesterday’s buy signal bar for the second entry and failed breakout below the July 14 low.
- Yesterday’s buy signal bar has a prominent tail above, which increases the odds of sellers above and sideways. However, it is a reasonable stop entry buy, meaning some bears will exit above yesterday’s bar.
- The bulls need a strong entry bar today, preferably closing the moving average and on its high. That would increase the odds of follow-through and higher prices.
- The bears want the market to stall just under the moving average and for the market to set up a second entry short (Low 2), which would trap the bulls into a losing trade above yesterday.
- Since the EURUSD is in a trading range, the market will probably disappoint both the bulls and bears, and the market will go sideways. One possibility is that today is a disappointment bar for the bulls, and a weak second entry short for the bears, which would confuse both sides.
Summary of today’s S&P Emini futures price action and what to expect tomorrow
Al created the SP500 Emini chart.
End of day video review
- I will update at the end of the day.
See the weekly update for a discussion of the price action on the weekly chart and for what to expect going into next week.
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.