Emini Buyers below Yesterday’s Low

Trading Update: Tuesday January 23, 2024

S&P Emini pre-open market analysis

Emini daily chart

• Yesterday, the Emini rallied above last Friday’s high, forming a large tail above the bar. Today will probably test yesterday’s low and there will likely be buyers below yesterday’s low.
• This is a sign of profit-taking above last Friday’s high, increasing the odds of sideways trading soon.
• There are probably buyers not far below yesterday’s low for at least a scalp, which would set up a high 1 buy signal bar, assuming today falls below yesterday’s low but fails to go outside up (above yesterday’s high).
• The bears will see yesterday as the start of a higher high major trend reversal. Next, they want a strong downside breakout today and a selloff back into the month-long trading range.
• More likely, a selloff will lead to a minor reversal, and the bears must do more.
• The bears have only been able to get two closes below the moving average in the past several months, which is a sign of strong buying pressure.
• Even if the bears are able to get a selloff below the January 17^th low, the market will probably have to rally and form a lower high before the bears get a selloff.
• This means that the best the bears can probably expect is sideways for the next two to three weeks.
• The bulls have a surprise upside breakout that began last week. The odds favor a second leg up. This means that trapped traders (both bulls and bears) will look to buy a pullback betting on a second leg up.
• However, traders must realize that the risk of selling off back to the month-long tight trading range is real. Therefore the second leg up may not last that many bars.  

Emini 5-minute chart and what to expect today

• Emini is up 5 points in the overnight Globex session.
• The Emini has gone sideways for most of the overnight Globex session. This increases the odds that the sideways trading will continue into the open of the U.S. session.
• As I often say, traders should expect the market to have a lot of trading range price action on the open and consider not trading for the first 6-12 bars. Unless they can trade with limit orders and make quick decisions.
• Most traders should wait for the open swing that often begins before the end of the second hour after forming a double top/bottom or a wedge top/bottom.
• There is an 80% chance of a trading range open and only a 20% chance of a trend from the open up or down.
• Trading rangers always have some variation of a double top/bottom or wedge top/bottom, which means there is an 80% chance of one of these patterns forming on the open.
• The most important thing on the open is to be patient and wait for clarity. Traders must remember that a trade is never overdue. If things are unclear and they cannot structure a profitable trader’s equation, it is best to remain flat and wait for more information.

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 are trying to get a third leg down below the January 17^th low.
• Yesterday, we formed a small bear sell signal bar, which was a double top with the January 18^th high. It is common for the market to go slightly beyond the extreme of small signal bars, which in this case would stop out the weak bars. Only for the market to reverse back down in the direction of yesterday’s bear sell signal bar.
• The bears want to get a test down to the December higher low.
• The bulls are hopeful that they will get a variation of a wedge bottom with January 5^th and 17^{th, leading} to a rally up to the December high.
• If the bears can get a downside breakout below the January 17^th low, they will have an open negative gap with the January 17^th low and today’s high.
• Although negative gaps have tails that overlap the breakout points, negative gaps are important because they are open gaps on a line charts.

Summary of today’s S&P Emini price action

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.

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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.

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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.

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