Trading Update: Wednesday April 13, 2022
Emini pre-open market analysis
Emini daily chart
- Emini bulls trying to form wedge bull flag with bears having bear close under the March 3 breakout point, confirming the gap closing.
- The bears now have two consecutive bear bars, both closing below their midpoints, so it is possible the bear breakout below April 7 will lead to a measuring gap that would take the market down to the 4,252.
- The bears are strong and have done an excellent job disappointing the bulls, they have not done enough to make the market always in short clearly, and the market will likely set up some kind of wedge bottom soon with April 1, April 7.
- The bulls hope that the April 7 measuring gap will fail and that the bulls will get a credible stop entry to buy for a bull breakout soon.
- The problem the bulls have is that the channel from March 29 is tight, so the first reversal up will likely be minor.
- Right now, the bulls see the current selloff as a higher low in a bull trend (you can call it a possible head and shoulders bottom which is a major trend reversal). The bulls do not yet have a credible stop entry.
- Bears hope that March 29 is a lower high major trend reversal, but the problem the bears have is that the rally up from March 14 is too tight, and any selloff is likely to be minor.
- Right now, the odds favor a bounce up for at least a few days.
- Overall, traders should look for a bounce back to the April 7 breakout point and possibly the April 1 breakout point, which would close the bear gaps.
Emini 5-minute chart and what to expect today
- Emini is down 6 points in the overnight Globex session.
- The bulls were able to get a strong rally even since yesterday’s close until around 11:00 PM PT. Since then, the bears have retested the Globex open.
- The odds favor the bears being disappointed today and the bulls getting a bull close above the open, so traders will look for buy setups.
- As always, traders should consider waiting for a credible stop entry such as a wedge bottom/top, a double bottom/top, or a strong breakout with follow-through.
Yesterday’s Emini setups
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 much more detailed explanation of the swing trades for each day (see Online Course/BTC Daily 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
- The bears have nine consecutive bear bars, which is extremely climactic. This means the odds favor a bull close today.
- While the nine consecutive bear bars are climactic, this is strong selling by the bears, and traders must be open to a low probability event such as a strong breakout below the March 7 low.
- More likely, the bears will soon be disappointed, and the bulls will get a minor reversal up for at least a day or two.
- Even if the bulls get a strong signal bar, the channel down is tight, so the first reversal will likely only be minor.
- While some bulls may buy this price level (March 7 low), most bulls are better off waiting for a credible stop entry due to the risk of a possible bear breakout here.
- Overall, traders should look for buy setups and bull breakouts with follow-through since the odds favor today’s closing above the open. Bulls will also look to fade weak bear selloffs.
- It is important not to be in denial if the bears get a strong breakout today. Just because the odds favor a bull close does not mean it is a guaranteed probability today.
Summary of today’s S&P Emini futures price action and what to expect tomorrow
Al created the SP500 Emini charts.
End of day summary
- The bulls opened with four consecutive bull bars, and the market went sideways, forming a triangle.
- While the odds were close to 50% for both the bulls and bears, the bulls had more buying pressure which slightly increased the odds of a bull breakout of the triangle.
- The bulls got their breakout around 8:00 PT, and it led to a 9-bar bull micro channel, and any pullback was likely to be minor.
- The trendline break around 9:00 PT was weak, which meant the best the bears could hope for was a trading range.
- Overall, the bears, failed to get a successful major trend reversal, and the bulls were able to close the market near its high.
- Today was a small pullback bull trend day and a great reminder that most bear reversal attempts would fail. It is usually better to wait for the bears to demonstrate strength before looking to fade the small pullback bull trend.
- Today was a strong close for the daily chart and increased the odds of a bounce over the next few days.
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
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.
