Trading Update: Friday February 10, 2023
Emini pre-open market analysis
Emini daily chart
- The market gapped up yesterday and then sold off below the February 7th outside up bar. Emini bears want test of 4,000.
- The rally up from January 19th has had consecutive buy climaxes and formed a parabolic wedge top, with February 2nd as the top of the wedge.
- Yesterday was enough of a surprise bear breakout to increase the odds of a second leg down and a test of the January 30th high which is the bottom of the third leg up in the wedge top.
- The 4,000 big round number is also close enough to the bottom of the last leg up in the wedge that the market will probably have to reach the round number.
- If the bulls are going to prevent a test down to 4,000 and the January 30th low, they will need to disappoint the bears sufficiently. If the bulls can get a strong reversal bar today, that might be enough to entice bears to exit shorts due to the risk of a failed 2nd leg down from the February 2nd high.
- Overall, today will be an important bar. The bears need to get a strong follow-through bar, and the bulls need to prevent any bear follow-through. More likely, today will be confusing and disappoint both the bulls and the bears, making the market more uncertain. Currently, the odds favor a test of 4,000 and the January 30th low.
Emini 5-minute chart and what to expect today
- Emini is down 20 points in the overnight Globex session.
- The overnight Globex market went sideways for several hours and broke out to the downside in the early morning hours.
- The bears hope the selloff that began in the early morning hours is the start of the trend resumption down.
- The bulls hope that the selloff will lead to a final flag. They want a strong reversal back into the trading range that began late last night around the 4,090 price level.
- As always, traders should expect a lot of trading range price action on the open and consider not trading the first 6-12 bars unless they are comfortable with limit order trading.
- Most traders should consider waiting to stop entry swing trade after forming a double top/bottom or a wedge top/bottom.
- There is an 80% chance that an opening swing will begin before the end of the 2nd hour and usually begins after forming one of the abovementioned patterns.
- Today is Friday, so weekly support and resistance are important. Currently, the market is 45 points below this week’s open. The bulls will want to close the week above the open of the week, and the bears want to keep the market below it. This makes the open of the week an obvious magnet going into today’s close. Since today is Friday, there is the added risk of a strong surprise breakout late in the day, so traders should be prepared for this.
Emini intraday market update
- The market gapped down and went sideways for the first 7 bars of the day.
- The bulls were able to form a wedge bottom with bars (1,3,7) with strong bull bars closing above their midpoints.
- This increased the odds of limited downside and an attempt at two legs up.
- The bulls got a strong breakout that ended at 7: AM PT (Bar 11).
- The market formed a deep pullback from the rally that ended around 8:00 AM (bar 18). This pullback was damaging for the bulls and increases the odds of that market entering breakout mode.
- As of 8:45 AM PT (bar27), the market is in breakout mode and will likely break out of the 18-bar range either up or down. The odds slightly favor the upside, but not by much.
Yesterday’s Emini setups
Al created the SP500 Emini charts.
EURUSD Forex market trading strategies
EURUSD Forex daily chart
- The bears are trying to get a second leg down after the recent strong three-bar bear breakout to below the moving average (blue line).
- While the odds favor a 2nd leg down, today is likely not the start of the 2nd leg down and will probably lead to profit taking.
- The market will probably have to rally and form a major lower high before the bears can form a major trend reversal, and before the bears can get a credible 2nd leg down.
- The rally is strong enough that the market is likely transitioning into a trading range more than a strong bear trend. This means traders should expect the bears to be disappointed with the rally. However, the bears will expect a 2nd leg down after the formation of a lower high major trend reversal.
- It is a low probability that the bears will be able to get a strong second leg down without the low-high major trend reversal.
Summary of today’s S&P Emini futures price action and what to expect tomorrow
Tim Fairweather created the SP500 Emini chart from Al’s provided summary
End of day review
- Today gapped down and went sideways for the rest of the day, indicating a trading range was to follow for the rest of the day.
- The bulls had a strong rally up to bar 12. However, it failed to break out above a late lower high from yesterday, and the market sold off, testing the bottom of the breakout (bar 7) low during bar 34 (9:20 AM PT).
- The bulls got a reversal up and a test of above the 18-bar range at (11 high) during 10:25 AM PT (bar 47) and continued sideways for the rest of the day.
- Overall, today was a trading range day, and buying low, selling high, and scalp is important.
- In general, traders should look to sell wedge tops and double tops near the high of the range and look to buy wedge bottoms and double bottoms near the low of the range.
See the weekly update for a discussion of the price action on the weekly chart and for what to expect going into next week.
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.
I thought bar 5 was a good L2 sell setup, but you didn’t mark it.
Was it not worth taking and why?
Looking at the day’s chart with hindsight may give you impression it was a good short but in real time its close was in the middle of a tight trading range open, so risky. Breakout mode, so a 50/50 gamble.
The bar 8 surprise followed a strong reversal from wedge bottom so higher probability, even though at top of same trading range.
Thank you for taking the time to answer my question.
I appreciate it.
why buy above 18 and 20 wasn’t marked by Al ? But he noted that bulls were buying 50% pullback?
You can buy above bar 18, but it is not an idea and a scalp at best. It follows a 5-bar bear microchannel and six consecutive bear bars. Tim and Al marked up the chart, and I am sure he is happy to chime in.
The logic is that the odds favor a 2nd leg down after the selloff to bar 18. This means the rally from bar 18 is likely a minor reversal that will have a second leg down.
Would it be possible to add a daily chart of Emini too in these pre market analysis reports, just like you do for EURUSD. It would be quite helpful for people like me who do not trade Emini and are thus not in tune with various levels that are mentioned in the report.
Hi Shubh, I am not able to promise a daily chart of the email Emini every day. However, I will work on posting 1-2 daily charts a week to help with following along. Thank you for the suggestion.
1-2 daily charts a week should do the trick Brad, thanks.