Trading Update: Wednesday September 11, 2024
End of day video review
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S&P Emini market analysis
Emini daily chart
- The Emini formed a strong downside breakout last Friday that is likely to get a second leg down. However, the daily chart is in the middle of a trading range.
- Because the selloff down to last Friday’s low is near the midpoint of the August rally, both bulls and bears began buying, anticipating a pullback to happy soon.
- At the moment, the market is deciding how deep the pullback will be for the bears.
- The problem that the bears have is that the channel up to the August high is tight, which increases the risk that the market will have to test the August high.
- This means that the pullback from the September selloff could be very deep.
- Even if the market reaches the August high before the bears get their second leg down, the odds will still favor a test of the September 6th close.
- The issue for the bears selling the September 6th close is that the risk-reward is bad, and the probability is not high enough to justify it. Whenever the risk-reward on a trade is considered a bad risk-reward.
- This means that bears who are selling down here have to find a way to increase their probability of making money. One method would be to sell more near the August highs. This increases the risk that there will be bears selling near the August highs if we get there, betting on a trading range.
- Overall, the daily chart is probably going to go sideways for the next several days. While the odds favor the bears getting a second leg down after the September selloff, the risk-reward makes the trade difficult because the market is in the middle of a trading range on the daily chart.
Emini 5-minute chart and what to expect today
- Today is going to open near the close of yesterday.
- The Globex market formed a downside breakout that failed during the 8:30 AM EST report bar. The Bulls managed to get a strong reversal over the next several bars.
- The bulls are hopeful that the reversal from the 8:30 AM EST report bar will lead to a strong bull trend day.
- While it is possible that the bulls form a strong bull trend day during the U.S. Session, the bulls have to break out above the two-day trading range. Otherwise, the risk for the bulls is a failed breakout of the range.
- The open will probably go sideways to up because of the recent Globex rally. This increases the risk that any selloff on the open will be brief and lead to a trading range.
- Traders should expect the 8:30 AM EST Globex rally to get a second leg up.
- As always, traders should wait for clarity on the open. If today is going to form a strong bull trend day, there will be plenty of time to enter once the trend has been established.
Yesterday’s Emini setups
Al created the SP500 Emini charts.
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.
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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.