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Emini Pullback below 4,900 Likely

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Trading Update: Wednesday January 24, 2024

S&P Emini pre-open market analysis

Emini daily chart

  • The Emini formed a follow-through bar today after Monday’s pause bar. The past two days have a lot of overlapping bars, which increase the odds of a pullback in the next day or two.
  • Part of the reason for the hesitation over the past few days is due to the market being so close to the 4,900 round number, which it reached during the overnight hours.  
  • Last week’s rally is strong enough for a second leg due to bears trapped into a losing trade and bulls trapped out of a winning trade.
  • The December month-long trading range will act as a magnet and increase the risk of a pullback to the midpoint of the trading range.
  • While the odds favor a second leg up following last week’s rally, traders must be mindful of the risk of the current rally setting up a possible final flag.
  • Overall, there are probably buyers not far below, and the bulls will probably get a small second leg up.
  • Overall, the market is at 4,900, following two overlapping bars. This will increase the risk of a failed breakout above 4,900 and the market getting pulled back into the middle of yesterday’s range.

Emini 5-minute chart and what to expect today

  • Emini is up 25 points in the overnight Globex session.
  • The Emini breached 4,900 during the overnight Globex session.
  • The overnight Globex session broke above the two-day trading range, forming a spike and channel bull trend on the 15-minute chart.
  • The bulls formed an upside breakout at 8:15 AM EST, probably leading to exhaustion and a pullback to below the breakout bar.
  • Traders should be mindful that the market is now above the 4,900 round number. This will be a magnet, and traders will likely expect it to get tested today or tomorrow.
  • This increases the odds of today being either a trading range or a bear trend day.
  • As always, traders should expect the open to have a lot of trading range price action. Most traders should not trade for the first 6-12 bars unless they can enter with and limit orders and a quick-to-make decision.
  • Most traders should wait for the opening swing that often begins before the end of the second hour. It is common for the opening swing to begin after the formation of 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.
  • Traders should also remember that, in general, there is a 50% chance that the initial breakout up or down is in the wrong direction and can get a major reversal.
  • Overall, traders should be patient on the open and not be in a rush to do anything. A trader does not need that many trades to do well. The key is eliminating the trades that have a bad trader’s equation. Most of these trades with poor math are due to placing a trade in the middle of a trading range or buying high or selling low in a trading range environment.

Yesterday’s Emini setups

SP500 Emini 5-Min Chart Wedge Bottom Then Small PB Bull Trend

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

EURUSD Daily: Wedge, Two Legs Up Likely
  • The EURUSD formed a wedge bottom yesterday, which led to a sharp reversal during the early morning hours.
  • Because of the wedge bottom and today’s strong reversal up, the odds favor at least a small second leg up.
  • The bulls are hopeful that today will close on its high and lead to strong follow-through buying tomorrow, breaking above the 20-period Exponential Moving Average (EMA)
  • Next, the bulls want a rally to the December high.
  • Today’s rally is strong enough that most Always In Bears will exit above yesterday’s high or wait and exit above today’s high.
  • Overall, today is a strong enough rally that it will probably get a second leg up. Traders will pay attention to see how determined the bulls are to get today to close on its high, and to see if it will close above the EMA.

Summary of today’s S&P Emini price action

SP500 Emini 5-Min Chart Parabolic Wedge Bottom Then Wedge Top

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.

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