Trading Update: Thursday January 22, 2026
S&P E-mini market analysis
E-mini daily chart
- The E-mini yesterday formed a late, strong upside breakout, creating a bull reversal bar on the daily chart. The bulls are hopeful that the reversal up yesterday was strong enough to get a second leg up. While this is good for the bulls, the daily chart context being in a trading range is bad context for the bulls.
- However, because of the context on the daily chart, the odds favor sellers above yesterday’s high scaling in higher. This increases the odds of the bears getting a 2nd leg down and testing Tuesday’s low.
- The bears are hopeful they will be able to create a strong reversal down and test of Tuesday’s low. If the test is strong, that will increase the odds of trapped traders and lower prices.
- Overall, the odds still favor a test of the December higher low and eventually a test of the November low, which is the bottom of the 4 month trading range.
E-mini 5-minute chart and what to expect today
- Today gapped up on the open and sold off with bars 3 and 4, testing the moving average.
- Yesterday’s late bull rally up to bar 64 is a strong enough major surprise that the odds favored at least a 2nd leg up, which created a gap up on the open.
- The selloff to the moving average was good for the bears; however, because of yesterday’s strong bull rally, the odds favored buyers near the moving average. This is because the bulls expected a third leg up and a wedge top after yesterday’s strong late bull breakout.
- So far, the bears as of bar 30 have a parabolic wedge top to bar 29 and a strong entry bar with bar 30. This increases the odds of a 2nd leg down and a test of the bar 18 high.
- The bulls are hopeful for an endless pullback and a small pullback bull trend from the bar 8 low. However, because of the opening reversal down, the odds are against a strong bull trend.
Yesterday’s E-mini setups
Richard created the SP500 E-mini chart.
Here are reasonable stop entry setups from yesterday. Chart shows each buy entry bar with a green arrow and each sell entry bar with a red arrow. Buyers of the Brooks Trading Course have access to a near 4-year library of detailed explanations of swing trade setups (see Online Course/BTC Daily Setups) linked to the Brooks Encyclopedia of Chart Patterns product.
The 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 E-mini.
Summary of today’s S&P E-mini price action
Richard created the SP500 E-mini chart.
E-mini end of day video review
Periodic end of day review videos will be moved to top of page when done.
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 E-mini price action real-time each day in the Brooks Trading Course trading room. We offer a 2 day free trial.
Charts use Pacific Time
When times are mentioned, it is USA Pacific Time. The E-mini 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.
Dear Brad,
I noticed that comments are closed on past posts. After studying your market analysis for January 6, 2025, I have a few questions regarding your reasoning:
You concluded that the bull signal bar at K11 (the first hour) lacked follow-through buying, based on the “50% probability of opening reversal” and the “parabolic wedge” formed between K3 and K9.
Observing the strong momentum from K3 to K9, I estimated a 60% probability of a second leg up and thus placed a buy order above that signal bar, failing to recognize it as a parabolic wedge buying climax.
(This led me to adopt a post-K13 plan of “wait for a pullback and look for long entries if the EMA20 holds,” rather than anticipating short setups as you did.)
How do you distinguish between a strong opening trend and an unsustainable buying climax driven by a parabolic wedge?
After K18 closed convincingly below the EMA20, I switched to a bearish bias. I even entered a short order below K27, which showed a failed second attempt by bulls to break above the EMA20 alongside a valid bear signal bar.
It was only at K29 that I recognized a Transitional Trading Range (TTR), shifting to long only after its breakout.
You, however, identified the double bottom and the strength of the opening rally as early as K19 to take long positions.
How can I better anticipate such shifts in market phase earlier? Are there flaws in my trading logic?
I appreciate your insights and look forward to your perspective.
Best regards,
SHENG
Sorry,is January 6, 2025
Not practical to discuss charts from over 2 weeks ago here. As noted in Brad’s bio above, you should use the Forum where you can get feedback from many traders.
I understand now. Thank you for your explanation.
Thank you, Brad, for the analysis. I have a question regarding your interpretation:
Why would you label the daily chart as a Trading Range (TR) rather than a Broad Bull Channel? While both contexts increase the odds of a test down to the November low, I believe distinguishing between a corrective phase within a trend (Broad Channel) and a genuine trend reversal process (TR) is critical for assessing the market cycle and structuring high-probability trades.