Trading Update: Thursday April 18, 2024

S&P Emini pre-open market analysis

Emini daily chart

• The Bears have four consecutive bear trend bars on the daily chart. This is a sign that the selling pressure is increasing in strength. However, the Emini is near major support, which will likely limit the downside.
• The 5,000 big round number is an obvious magnet below, and both the bulls and bears want to see how the market responds to it.
• The weekly moving average is also around 5,030 and will likely be a major support.
• Because the market is close to the 5,000 round number and the weekly moving average, the downside is probably limited, and the market will have to bounce before it breaks far below the 5,000 big round number.
• The market has been in a bull channel since January 5th, and the bears want to get to the bottom of the bull channel (January 5^th low).
• While the market will likely test down to the January 5^th low sometime over the next several months, the bears will probably have to form a more credible Major Trend Reversal first. This means the market may have to retrace at least 50% of the April selloff.
• The bulls do not mind the selloff if it leads to a major high low, followed by a strong rally to a new all-time high.
• Overall, the selling pressure is strong enough on the daily chart to expect a second leg down. However, the downside is probably limited by the important support of the 5,000 round number and the weekly moving average, which is not far below.

Emini 5-minute chart and what to expect today

• Emini is up 10 points in the overnight Globex session.
• The overnight Globex market has been in a trading range of less than 20 points. This is a sign that the market is in breakout mode and deciding who will get the successful breakout.
• The market may go sideways until the opening of the U.S. Session and then decide on a successful breakout.
• Because the daily chart is getting near major support, there is an increased risk of today getting a close above the opening of the day.
• This means that traders should be mindful of the possibility of an early low of the day.
• Most traders should consider waiting for 6-12 bars before placing a trade. This will increase the probability of a trader catching the high or low of the day since the open often has several reversals, which can trap traders in the wrong direction.
• Traders should often consider trying to catch the opening swing, which usually begins before the end of the second hour after the formation of a double top/bottom or a wedge top/bottom.
• It is common for the opening swing to last for at least two legs and two hours, and at least 40% of the time, it will double the opening range, providing great risk/reward.
• Overall, the most important thing on the open is to be patient and not be in a rush.

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 EURUSD is Always In Short following last week’s downside breakout.
• The bears had strong breakout bars on April 10^th and April 12^th, followed by weak follow-through bars.
• This is a sign that the selloff might be a sell vacuum within a large trading range. This increases the risk of a deeper or more prolonged pullback than what the bears want.
• The selloff from last week is still strong enough for a second leg down. However, it would have been better if the bears could have formed consecutive strong bear trend bars rather than a big bear breakout followed by a weak follow-through bar.
• The bulls need to add more buying pressure to the market if they will strong the bears.
• The bulls are hopeful that the selloff last week is going to become a second leg trap in a trading range day. While this is possible, the selloff previous week is strong enough that this is unlikely without the bulls developing more buying pressure.
• Overall, the bears want to form a Low 1 short today; however, with yesterday’s bull reversal bar being as strong as it is, the odds favor any Low 1 finding buyers below and getting a small second leg up. It is important to remember that Low 1 setups often lead to deeper pullbacks, such as a Low 2 or Low 3 (wedge), followed by trend resumption. The reason why Low 1s often lead to pullbacks is because they are often micro double tops/bottoms on smaller time frame charts.

Summary of today’s S&P Emini price action

Al created the SP500 Emini charts.

End of day video review

Live stream videos to follow Monday, Wednesday and Friday (subject to change).

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.