Trading Update: Wednesday May 10, 2023
S&P Emini pre-open market analysis
Emini daily chart
- The Emini has had two consecutive days, with the range being less than 20 points. Bulls want follow-through buying.
- The daily chart is in the middle of a trading range that has gone on for over a month. This means that the market is in breakout mode and deciding on the direction of the breakout.
- Traders should assume that the probability is close to 50% for both the bulls and the bears.
- At the moment, the odds slightly favor the bulls, but not by much. If the bulls had a big advantage, the market would not go sideways.
- Since last Friday had a strong reversal up, that increases the odds that the bulls will get a second leg up to the May 1st low.
- The bulls will probably get at least a small second leg up because of the strength of the May 5th bull breakout.
- The bears had a 4-bar bear micro channel down to May 4th. The bears that sold the May 4th high are trapped and likely sold more higher. Trading ranges are forgiving if a trader uses wide stops and scales in higher. Like the bears that sold the April 26th high and scaled in higher, the market eventually allowed those bears out.
- Overall, the market is in breakout mode, and it is important to realize that the probability is close to 50% for both the bulls and the bears. If one side had a high probability, the market would not go sideways. Traders who want high probability should wait and see a clear breakout with follow-through; otherwise, sideways is more likely.
Emini 5-minute chart and what to expect today
- Emini is up 27 points in the overnight Globex session.
- The Globex Market had an upside breakout recently during the 5:30 AM PT report.
- Today will probably gap up, and the Bulls will try to get a second leg up after last Friday’s bull breakout.
- As I often say, traders should expect the open to go sideways for the first 6-12 bars. However, they should be open to a possible bull trend from the open.
- Since the odds are the market will gap up, traders should expect the bulls to get at least a second leg up. If the market sells off on the open, traders should expect the bulls to get at least an attempt up following the gap up.
- If the buying pressure is not strong on the open, traders should expect sideways to down and for the market to try and test the moving average.
Emini intraday market update
- The Emini gapped up and sold off quickly down to bar 5.
- The selloff to bar 5 was strong enough to make the market Always In Short and increased the odds of a second leg down. However, the selloff was climactic, which increased the risk of a deep pullback.
- It was reasonable to buy bar 1 following the large gap up. Any selloff was more likely to convert the market into a trading range instead of a bear trend.
- The rally on bar 7 was strong. However, it followed a large selloff.
- This meant the best the bulls could expect was a trading range. While the odds favored buyers below bar 7:10 AM PT for a second leg up, the bears got a downside breakout a few bars later, a new low of the day.
- As of bar 40 (9:50 AM PT), while the bears have done a good job with the selling pressure today, there has been a lot of buying pressure. This increases the risk of today not closing on its low, so traders should expect a rally back to the bar 5 low.
Yesterday’s Emini setups
Richard created the SP500 Emini charts (Al on leave).
Here are several reasonable stop entry setups from yesterday. I show each buy entry with a green rectangle and each sell entry with a red rectangle. 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 closed under the moving average yesterday for the first time in several bars.
- This is a sign that the market is converting into a trading range and will probably begin to go sideways to down soon.
- Since the market spent so much time above the moving average, there will probably be buyers at the moving average for at least a scalp, which is happening now.
- The bulls want a strong bull close today and a reversal up above the high of May.
- However, the probable the bulls have is that even if today closes as a strong bull bar, it will force traders to buy in the middle of a tight trading range. In general, buying in a tight trading range is a low-probability trade. This means that sideways is more likely.
- Overall, the bears completed the first task of getting a close below the moving average; however, they must do more. The bears need to get consecutive closes below the moving average. Until then, the odds are that the market will continue to go sideways in a tight trading range.
Summary of today’s S&P Emini price action
Richard created the SP500 Emini charts (Al on leave).
End of day video review
Live stream video review with Brad Wolff. Here is YouTube link:
Emini End of Day Video Review for Wednesday May 10, 2023
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.
