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Emini Disappointment likely for Bulls

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Trading Update: Tuesday August 20, 2024

S&P Emini market analysis

Emini daily chart

  • The Emini rallied yesterday, forming a bull bar and closing on its high. This is a buy climax bar late in an 11-bar bull microchannel, which increases the risk that today will fall below yesterday’s low.
  • Today will likely selloff and form a disappointment bar for the bulls.
  • The 5,600 round number was likely to be a resistance level and find sellers. This increases the odds that the market will have to test back down to the 5,600 round number over the next day or two.
  • While the rally-up is strong, it is also climactic. The odds favor buyers below, and the first reversal failed. However, the pullback might be deep since an 11-bar bull microchannel is extreme.
  • The Bears need to do more if they are going to get a reversal down. At a minimum, they need to stop the buying pressure by making the market go sideways. Without the market stalling, the odds are against a successful reversal down.

Emini 5-minute chart and what to expect today

  • The Emini opened with a small gap up.
  • The market formed a parabolic wedge top with bar 6, which increased the odds of a reversal and possible high of the day.
  • The bears formed a strong opening reversal on bar 7 down to bar 12. This increases the odds that bar 6 will remain the high of the day.
  • The market formed a parabolic wedge top with bar 6 and reversed down.
  • While the bears are hopeful that today will become a strong bear trend day, they need to do more than bar 12 to convince traders.
  • The market is following a strong bull trend, and the rally up to bar 6 is likely to be an exhaustive buy climax. This increases the odds of a trading range forming today.
  • There is a 75% chance of a trading range lasting for at least two hours, beginning before the end of the second hour.
  • At the moment, the market is Always In Short, however it is possibly low in a trading range.        
  • The odds favor a second leg down after the bar 9 bear breakout.
  • The bears are hopeful that today has begun the selloff down to the 5,600 round number.
  • Because the channel up is tight, the risk for the bears is that the selloff down to bar 12 is part of a minor reversal that will need a deep pullback.
  • At the moment, the bar 14 breakout is strong enough that the odds favor lower prices.

Yesterday’s Emini setups

SP500 Emini 5-Min Chart Bear Trap and Then Small PB Bull Trend

Al created the SP500 Emini charts.

Here are reasonable stop entry setups from yesterday. I show each buy entry bar with a green arrow and each sell entry bar with a red arrow. 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 is getting a strong upside breakout, testing near the December 2023 high.
  • While the rally up from the August low has had several pushes up, it is a breakout on a higher time frame.
  • The monthly chart of the EURUSD has been in a tight trading range since January 2021. The bulls hope the August rally starts a second leg up following the September 30th low.
  • The bears want the August rally to lead to a failed breakout of the December 2023 high.
  • At the moment, the odds favor a breakout of the December high. Traders will pay close attention to see what happens. If the market breaks far above the December high before going sideways, that will be a sign of strong buying.
  • However, if, instead, the market goes sideways just under the December high, that will increase the odds that the current August rally is a bull leg in what will be part of the overall trading range that began back in 2021.

Summary of today’s S&P Emini price action

SP500 Emini 5-Min Chart Parabolic Wedge Reversal Down

Al created the SP500 Emini charts.

End of day video review

End Of Day Review will be presented in the Trading Room today. See below for details on how to sign up.

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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