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Emini Upside Breakout Likely to Get Second Leg

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Trading Update: Monday January 22, 2024

S&P Emini pre-open market analysis

Emini daily chart

  • The recent upside breakout is strong enough for a second leg. This increases the odds that there will be buyers below as trapped bulls and bears both look to buy for the second leg.
  • The Emini formed a strong upside breakout last Friday of the month-long trading range, closing above the March 2022 high, which was an important magnet.
  • Traders will pay close attention to today’s follow-through.  The bears are hopeful that today will create a strong bear reversal bar, making traders question the determination of the bulls to get a second leg.
  • More likely, the odds favor a second leg up even if today’s follow-through is disappointing.
  • The bears are hopeful that the recent month-long trading range will lead to a final flag and a reversal back into the trading range. The bears will need to create more selling pressure before the odds favor a reversal.
  • Overall, the recent upside breakout is enough of a surprise that the odds favor a second leg up, even if the market has to get a pullback for a day or two.

Emini 5-minute chart and what to expect today

  • Emini is up 15 points in the overnight Globex session.
  • The overnight Globex session has gone mostly sideways in a tight trading range.
  • Today has the potential to disappoint the bulls and lead to a trading range. This means that traders should pay attention to the open of the day as it will likely be a magnet for most of the day.
  • Traders should also pay attention to the high of last Friday. The bulls want to trigger the buy above it and close above last Friday’s high, which would be a sign of strength.
  • As always, traders should assume that the open will have a lot of trading range price action on the open. This means that traders should consider not trading for the first 6-12 bars unless they can make quick decisions and trade with limit orders.
  • Most traders should focus on the opening swing that often begins before the end of the second hour after forming a double top/bottom or a wedge top/bottom.
  • Traders should focus on patience, especially on the open. It is exciting to want to trade after the weekend. However, patience and waiting for good-quality setups will reward traders. A trade is never overdue, and there are 81 bars to a day, which is plenty of time to find a few trades.

Friday’s Emini setups

SP500 Emini 5-Minute Chart Small Pullback Bull Trend From The Open

Al created the SP500 Emini charts.

Here are reasonable stop entry setups from Friday. 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: Possible Third Leg Down
  • The EURUSD quickly became neutral after the January 16th downside breakout. The bears are still hopeful that the January 16th breakout will lead to a test of the December low.
  • The Bears have a second leg down after the January 16th bear breakout. However, they may get a third leg down below last weeks low.
  • At the moment, the odds favor more sideways trading.
  • The bulls want a reversal up and a test of the December high.  
  • Last Friday formed a bull bar closing on its high. However, it is a three-bar tight trading range following the January 16th bear breakout. This increases the risk and could lead to a bear flag and a test of the January low.

Summary of today’s S&P Emini price action

SP500 Emini 5-Min Chart Trading Range Open Then Trading Range Day

Al created the SP500 Emini charts.

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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