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Emini Trapped Bulls, Second Leg Down Likely

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Trading Update: Wednesday March 8, 2023

Emini pre-open market analysis

Emini daily chart

  • Emini trapped bulls with bears having a surprise breakout during the U.S. Session, leading to a big bear trend day.
  • The bulls should have gotten a second leg up after March 2nd and 3rd. However, instead of a second leg, the bears got trapped buying below March 6th.
  • Yesterday’s bear breakout is strong enough to lead to a second leg down. Therefore, the first reversal up will probably fail.
  • Since the market is still in a likely trading range, traders expect today’s follow-through to become disappointing. This means that today will probably not be another big bear trend bar; instead, it will be some kind of doji/trading range bar.
  • Bulls are trapped into a losing trade. Some of them bought the bull breakout (March 3rd) or during the pullback yesterday, and they did not anticipate this deep of a pullback.
  • These bulls are disappointed; they will likely look to exit their trade breakeven with as small of a loss as possible.  This means that the first reversal up will probably get sold.
  • There are also bears who are trapped out of a potential decent short. They will also probably look to sell the first reversal up, betting on a second leg down.
  • The lower probability event would be another big bear trend day today, trapping bulls into a bad trade, and bears out of an excellent short.
  • It is important to remember trading ranges are constantly closing gaps and disappointing trend traders.
  • When traders think that the market is in a trading range, they look for open Breakout Points (gaps) like the March 1st high and expect these gaps to close.
  • Overall, traders should expect sideways trading for the next few weeks. The bears will probably get a second leg down. Also, the bulls will probably get a second leg up from last week’s breakout. This means traders will use wide stops and scale in betting on sideways trading.

Emini 5-minute chart and what to expect today

  • Emini is up 5 points in the overnight Globex session.
  • The 15-minute chart of the overnight Globex session has been in a tight trading range since yesterday’s session.
  • Bears are trying to get a downside breakout of the tight trading range and a second leg down.
  • While the odds favor a trading range open and limit order trading for the first hour, it is possible that the market gets follow-through selling on the open.
  • If the market gets follow-through selling, it will probably not last that long. This means traders expect bears to scalp out and the market to reverse up.
  • Look at most big trend bars on the daily chart and notice how the follow-through bar is typically disappointing. This means that today will probably have a lot of trading range trading today.
  • As always, traders should look for a double bottom/top or a wedge bottom/top to set up a stop-entry swing trade. Typically, a swing occurs before the end of the second hour, so traders should be mindful of it on the open.

Emini intraday market update

  • The Emini opening has been going sideways for the first 18 bars.
  • The bulls tried to get an upside breakout. However, the follow-through was bad after every strong bull close.
  • The market formed a wedge top, and the bears got a reversal down on bar 14, leading to a three-bar bear breakout. This breakout is strong enough to lead to a 2nd leg down. However, just like the bulls were disappointed with their attempt at a rally and bull trend, the bears will likely become disappointed as well.
  • Because of what I said on the daily chart and the first 12 bars of the day have a lot of trading range price action, there is an increased risk of the day having a lot of trading range price action.
  • In a trading range, it is important to buy low, sell high, and scalp. This means that after two or three legs down near the bottom of the range, stop selling and look to buy. The opposite goes for two to three legs at the top of the range.
  • Traders should pay attention to the open-of-the-day price level as this will likely be a magnet for most of the day.

Yesterday’s Emini setups

SP500 Emini 5-minute Chart Bear Trend from the Open Midday Acceleration Down. Emini trapped bulls.

Al created the SP500 Emini charts.

Here are several 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 detailed setups.

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

EURUSD Daily: Bear Surprise, Second Leg Down Likely
  • The EURUSD had a surprise bear breakout following a wedge (7-bar Micro Wedge) top. Yesterday’s bear breakout is enough of a surprise that it will probably get a second leg down.
  • This means that there are probably sellers above today’s bar, and the market will have to form a micro double bottom before the bulls can get a reversal up.
  • The bulls need to get a strong reversal up today to undo the damage caused by the bears. There will be bears looking to sell a pullback of yesterday’s close. If today is a strong bull trend bar, it will trap those bears, forcing them to exit with a loss.
  • Even if today is a decent size bull bar like February 27th, it will still be problematic since the bulls will probably need a micro double bottom before traders buy.
  • The lower probability even would be a consecutive strong bear trend bar today. This would increase the probability of getting down to the November 21st bear channel low.
  • Overall, traders should expect the bears to be disappointed with the follow-through after yesterday’s big bear trend bar. This means that sideways is likely over the next week.

Summary of today’s S&P Emini futures price action and what to expect tomorrow

SP500 Emini 5-minute Chart Double Top Trading Range Day

Al created the SP500 Emini charts.

End of day review

  • Live stream video trial replacement of end of day review coming soon.

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.

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