End of day comments about today’s Emini price action and day trading: strong bear trend day
Although yesterday was a bull channel and therefore a bear flag, the selling today was much stronger than what is usual after such a strong bull reversal. Tomorrow might gap down and create a measuring gap on the daily chart.
Although a trading range day was likely after yesterday’s strong bull trend reversal, today was a trend from the open bear trend day. The selloff was much deeper than what was likely, given how strongly up yesterday was. However, I mentioned that the bears might get a sharp leg down because the 60 minute chart might be forming a triangle and it needed one more leg down to complete the pattern. The bear trend almost completely reversed yesterday’s bull trend.
Today ended as a big inside day and there is now a bear ioi setup on the daily chart. This means that today is a bear day inside of yesterday, and yesterday was an outside day (its high was above the high of the day before, and its low was below the low of that day, Tuesday). This is a breakout mode setup. Bulls tomorrow will buy above today’s high, but that is very unlikely to happen. Bears will short below today’s low for a leg down on the daily chart. It looks like the Emini will fall to the August low soon. It might gap down tomorrow and that gap could become a measuring gap.
S&P500 Emini intraday market update for price action day traders: probable trading range day for day traders
Posted 7:15 a.m.
The Emini sold off on the open to the 60 minute moving average. The bear bars had prominent tails below and yesterday was a strong bull trend day. While it is possible that today will reverse yesterday and become a bear trend day, it is more likely that the initial selling will be part of a trading range day. It is deep enough and strong enough to make a bull trend day unlikely. Since yesterday was such a big day, today might become an inside day. With yesterday’s strong buying, it is unlikely that today will be a strong bear trend day.
The bulls might be able to rally to a new high of the day, but if they do so, the open of the day will probably be a magnet and the day will probably then end up as a doji day, closing around the open.
Unless there is a strong breakout up or down, day traders will trade today like a trading range day. They will look to buy low, sell high, and scalp.
The Emini’s price action yesterday was very strong for swing trading, and day traders will probably have follow-through buying at some point in the next few days. However, it was a buy climax and it might pull back or have a couple of small, trading range days first.
Before the open comments on S&P500 Emini 60 minute, daily, weekly, and monthly candle charts
The Emini reversed up strongly from 1 tick below last week’s low, forming a double bottom reversal. The bulls need to get above the neck line of the double bottom, which is Monday’s high of 1971.00. If so, it might rally for a measured move up. However, since the Emini is in a 4 month trading range, most breakouts will fail (for example, today failed in its breakout below last week’s low). This means that a rally above the neck line will probably fail as well, and the trading range will probably continue. Until there is a strong breakout up or down with strong follow-through, day traders will assume that breakouts will fail and they will look for reversals. Because the Emini has had two strong legs down and two strong legs up, but it is sideways, it might be forming a triangle on the 60 minute chart. It needs one more leg down to complete the pattern. A trading range is a triangle if it is sideways, convergent, and has at least 3 legs up or down.
The reversal up today was so strong that there will probably be follow-through buying over the next few days, but it might have a small pullback first after such a climactic bull trend reversal.
See the weekly update for a discussion of the weekly chart.
Traders can see the end of the day bar-by-bar price action report by signing up for free at BrooksPriceAction.com. I talk about the detailed Emini price action real-time throughout the day in the BrooksPriceAction.com trading room, and a 2 day free trial is available.
When I mention time, it is USA Pacific Standard Time (the Emini day session opens at 6:30 am PST, and closes at 1:15 pm PST). You can read background information on the intraday market reports on the Intraday Market Update page.
Dear Shafiq.
This is Al’s website guy answering. Sorry to say but Al really cannot make time to get into extensive Q&A on this site. here is what Al notes on the Contact Al page here: “I would love to answer everyone’s questions about trading, but I get so many emails (sometimes 50 – 100 in a day). Now that I am getting older, I am really very afraid of getting burnt out. … …”
As Al says on that page, the two places to ask questions are (1) in his trading room at end of day, and (2) on the BrooksPriceAction.com forum site. There is a daily updates page where room attendees can post follow up queries. On BPA(dot)com there is also a traditional forum (not comments like here) where other price action traders help each other out.
Trust you can understand. Al is already doing so much we need to respect his valuable time.
But nothing stops other traders here replying to your comments, as can happen.
Best regards,
BTC Admin
Yes, I agree. I asked too many hand-walking questions. As I read Al’s note again and again, I get most of my questions answered. One just has to read his notes carefully to understand what 84 bars say individually and collectively. Thanks again.
(3) Now that a new context of end-of-QE is evolving in market, for which traders are extremely active on both LONG and SHORT, which you cited as “2-3 days trend trades”, how should novice adjust to it – wider stop-loss, or tighter stop-loss. In other words, determining “always-in-LONG” and “always-in-short” is now harder.
(2) If one intends to enter a swing-play of 2-3 weeks for the next LONG rally (whenever it comes), what should be the scaling-in mechanism by using measured-move calculations? (As an example, enter with exploratory position at ~1900. If it goes wrong, get out; otherwise scale in on each LONG-ward pullback. What if whip-lash?) I.e., what is typical entry strategy that you recommend when MTR is on horizon. How to get ready?
(1) Now that bull-trap has evolved into a strong sell pressure and raised the probability of 2nd leg down, we see target of 1900 (or 1890) is within the horizon. My question is: when target is obtained, I wait for consolidation and sometimes Reverse Head and Shoulder, the pattern which, you commented, often fails. Is it recommended to get in with that pattern in hand, or should one wait for a very strong green bar to get in? How do you advise to **prepare** for LONG play while a SHORT is on session?
Thanks for mentoring. 3 Questions. Hope it is Ok.