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Emini First Reversal Up Likely to Fail

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Trading Update: Monday October 23, 2023

S&P Emini pre-open market analysis

Emini daily chart

  • The Emini sold off, closing below the October 6th low. This is a sign of strong selling and the trapped bull using any bounce to sell out of losing longs. This increases the probability that the first reveal up will fail.
  • The bears hope that the recent downside momentum is strong enough to lead to a test down to the year’s open.
  • There will likely be resistance near 4,178, which is the midpoint of the rally that began in October 2022.
  • The bulls want the market to form a wedge bottom with August 18th and October 6th. If the bulls are going to get a reversal up, they will need to halt the selling pressure. They can create strong bull closes or make the market go sideways.
  • The overall Emini is near the middle of the broad trading range on the weekly chart. This means the market can fall much lower before bulls begin to buy.
  • Overall, traders will expect the bears to get another leg down after the past three big bear trend bars. Traders should wait and see what the second leg down looks like before buying. The bulls will try and prevent the bears from getting more follow-through selling today.

Emini 5-minute chart and what to expect today

  • Emini is down 15 points in the overnight Globex session.
  • Traders should assume that today will have a lot of trading range price action on the open. In general, there is an 80% chance of a trading range open and only a 20% chance of a trend from the open.
  • Because of the recent selling pressure on the daily chart, today will probably disappoint the bears and be either a weak bear bar or forming a bull bar. 
  • Traders should pay attention to the day’s open and last Friday’s low, as both will probably be important magnets.
  • Most traders should try and catch the opening swing that often begins before the end of the second hour. It is typical for the opening swing to start after the formation of a double top/bottom or a wedge top/bottom. This means traders can often wait for one of the abovementioned patterns to develop before placing a trade.
  • Lastly, traders must remember to be patient. If a setup does not look right, ignore it and wait for more clarity. There are 81 bars to the day, which is plenty of time for a trader to find a few reasonable trades.

Emini intraday market update

  • The Emini gapped down and reversed up after the first three bars of the day.
  • Bar 4 was a big bull reversal bar and a large enough surprise that the odds favored higher prices and a measured move up of the opening range.
  • Because of the daily chart testing major support, the October 6th low, today had the potential to become a strong bull trend day.
  • The bulls recently formed a buy climax at bar 42 which will likely lead to sideways trading and a pause in the trend.

Yesterday’s Emini setups

SP500 Emini 5-Min Chart Bear Trend from Open Reversal Failed and Bear Trend Resumption

Richard created the SP500 Emini chart (Al on leave).

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

EURUSD Daily: Bulls Want Upside Breakout of Triangle
  • The EURUSD formed a small bull close above the moving average last Friday.
  • The bulls are hopeful this is the start of an upside breakout, however, the market has not clearly broken out above the tight trading range.
  • Until there is a clear breakout, there is no breakout. This means that traders should wait for confirmation if the bull breakout will succeed or fail.
  • The bears will try to cause any bull breakout above the moving average to fail and reverse back down.
  • The market is in a tight triangle, which is a neutral market. This means that traders should assume that the probability for both the bulls and the bears is close to 50%.
  • Overall, traders should wait and see the breakout before placing a trade.

Summary of today’s S&P Emini price action

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

Al created the SP500 Emini chart.

End of day video review

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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