Trading Update: Friday May 19, 2023
S&P Emini pre-open market analysis
Emini daily chart
- The Emini had a bull breakout of triangle and formed a strong follow-through bar today.
- The bulls closed above the May 1st high, a sigh of strength for the bulls.
- The market is probably Always In Long and likely going higher. Next, the bulls want a close above the February 2nd high.
- Al Brooks has mentioned several times that the market will probably have to reach the August 2022 high and allow the scale in bulls out. Buying during the August rally was reasonable, and the market never let those bulls out.
- Typically, when you take a reasonable trade, the market will eventually retest that entry price level and allow the scale in traders out with a profit.
- Since the daily chart will likely get a second leg up, the first reversal down will likely be limited. This means that there are probably buyers below any pullback.
- The bears want yesterday’s rally to continue the formation of the expanding triangle that began in April. However, the problem the bears face with this argument is that the breakout above the May high appears strong. This increases the risk of a bull breakout above a trading range, not the formation of a topping patting within an expanding triangle.
Emini 5-minute chart and what to expect today
- Emini is up 12 points in the overnight Globex session.
- Yesterday formed a climactic rally into the close. This means that the open today has a 75% chance of at least two hours of sideways trading beginning before the end of the second hour.
- There is a 50% chance that the open has follow-through buying; however, if it does, there is still a 75% chance of at least two hours of sideways trading beginning before the end of the second hour.
- Since the odds favor a trading range open, traders should be cautious on the open and expect a lot of limit order trading. Most traders should consider waiting for 6-12 bars before placing a trade.
- On the open, there is a 50% chance that the initial move will reverse no matter how strong the initial move appears to be.
- Most traders should try and catch the opening swing trade that often begins before the end of the second hour. There is often a double top/bottom or a wedge top/bottom that forms before the opening swing begins.
- Today is Friday, so weekly support and resistance are important. The Emini is currently above the week of May 5th. Bulls want to keep the market above it, and the bears want it to close below it.
- Since today is the final day of the week, there is the additional risk of a surprise breakout late in the day as traders decide on the close of the weekly chart.
Emini intraday market update
- The Emini has gone sideways for the first 9 bars of the day. The market has probably began the two hours of sideways trading.
- As I mentioned in the premarket report there is a 75% of at least two hours of sideways trading today due to the climatic rally going into yesterday’s close.
- The range is tight, which means the odds are the market willl get a measured move up or down of the opening range.
- Most traders should be patient. Eventually there will be a breakout, so there is no rush. If today is going to be a strong trend day there will be plenty of time to buy.
- The market is close enough to the moving average that it will probably have to reach it.
- Important magnets to pay attention to are the open of the day, the May 1st High, and the High of yesterday.
- Yesterday’s high is important because the bulls want another close above the prior days high, which would be a sign of strength.
Yesterday’s Emini setups
Al created the SP500 Emini charts.
EURUSD Forex market trading strategies
EURUSD Forex daily chart
- The EURUSD is Always In Short and trying to reach the March 24th low.
- The channel down is tight, increasing the odds that the first reversal up will fail.
- The bulls need to develop more buying pressure before they have a credible stop-entry buy.
- At a minimum, the bulls will need a trendline breakout of the tight bear channel that began in May and the formation of a double bottom.
- The bulls can argue a parabolic wedge bottom with the current bear channel. However, most parabolic wedge bottoms are minor, leading to sideways trading, not a reversal.
- Overall, the EURUSD will probably have to get down to the March 24th bottom of the channel, even if the market gets a pullback first.
Summary of today’s S&P Emini price action
Al created the SP500 Emini charts.
End of day video review
Today’s End Of Day review will be presented in the Trading Room and only available to the trading room subscribers.
Brad Wolff will be hosting a Live Q&A tomorrow (Saturday 5/20) at 1:00 PM PT/ 3:00 PM ET for members of the trading room. If you are subscribed for the month of May, you will receive a link, and you can access the link as you normally do for the trading room sessions.
If you would like to subscribe to the trading room, you may do so at www.brookspriceaction.com
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.
Hi, on EUR/USD: The channel down is tight, increasing the odds that the first reversal down will fail.
Do you mean first reversal up will fail?
Thank you, Martin, I have made the correction.