Trading Update: Wednesday September 4, 2024
S&P Emini market analysis
Emini daily chart
- The Emini formed a strong downside breakout yesterday, closing below the daily chart moving average.
- This is a warning that the bulls are losing control and that the market is becoming more neutral.
- The bears did a great job getting a close below the 20-day moving average. However, that is not enough for traders to conclude that the bears are going to win.
- Ideally, the bears need to get a strong follow-through bar before traders are convinced that the market is going to go lower. Without it, the risk of the market going sideways is still valid.
- The bulls will see yesterday as an opportunity to buy below the moving average for the first time in several weeks.
- While some bulls will buy it, other traders will be concerned that the August rally is losing momentum.
- Yesterday’s bear breakout is strong enough that the odds favor a second leg down. However, the pullback may be deep before the bears get their second leg.
- Today will probably create disappointing follow-through for the bears and close above the open of the day or form a weak bear bar.
- Overall, the upside is probably limited over the next couple of days, and the Bears will likely get a second leg down.
Emini 5-minute chart and what to expect today
- The Emini gaped down on the open, however the gap was small and likely to close.
- Yesterday was strong and climactic. There is a 75% chance that today will have two hours of trading range price action beginning before the end of the second hour.
- There is a 50% chance of follow-through selling on the open, followed by 75% chance of sideways trading lasting two hours.
- There is only a 25% chance of a trend day up or down.
- The market opened with a bull bar on bar 1, making it a reasonable buy for a test of yesterday ‘s bar 80 major lower high.
- The bulls want today to rally as much as possible to disappoint the bears. A possible target for the bulls is the midpoint of yesterday’s high. While it is far away, it is not out of reach.
- If today is going to be a trend day, it is more likely to form a bull trend day. This means that the downside ls likely limited.
Emini Intra Day Update
- Today formed a strong rally up to the bar 19 close.
- While the bulls did a great job with the rally, it was consecutive buy climaxes in a day where the context favored a trading range, not a bull trend. The rally up to bar 199 was also the first strong break of yesterday’s bear trend.
- This increased the odds that the rally was minor and would have to pull back.
- Bar 19 was a reasonable buy the close bar, although most traders would be hesitant to take it because it is consecutive buy climaxes.
- The market may end up testing the close of bar 19 later today. This is because the bulls who bought the close of 19 never had a chance to exit back at the 19 close after bar 20.
- There was an 80% chance that the buy the close bulls who bought 19 and more above 32 would be able to exit breakeven on their entire trade around 5,550 which is why the market rallied on bar 37.
- Bar 39 is a sign that there were sellers at that breakeven price level. While bar 39 looks good for the bears, it is not a great short. It is retesting a price level where bears got trapped, bar 33 area. The bears need more follow-through selling after bar 39 to convince traders to short.
Yesterday’s Emini setups
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 bears formed a two-bar reversal down on August 29th. This is a strong enough downside breakout after consecutive buy climaxes on the way up to the August 23rd high that the odds favor a 2nd leg down.
- Today, a bull bar was formed, closing near its high. However, it is at the top of a 4-bar tight trading range. There are probably sellers above today’s high, and the odds favor a second leg down. This means that tomorrow will probably not be a strong bull trend bar.
- While the rally up to the August high is strong, it is climactic, which is why the market is currently pulling back.
- At the moment, the Bears have done a great job with the selling pressure. However, they need to do more.
- Overall, the odds favor the Bears getting a second leg down. However, the downside is probably limited.
Summary of today’s S&P Emini price action
Al created the SP500 Emini charts.
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.
