Trading Update: Friday May 26, 2023
S&P Emini pre-open market analysis
Emini daily chart
- The Emini gapped up and rallied, forming a doji bar on the daily chart. There were bulls who bought below May 22nd and got trapped on the following bar. These bulls will likely use first reversal to exit longs (or any bounce) with a smaller loss.
- While the bears did an excellent job getting selling pressure with the recent four-bar bear micro channel that ended on May 24th, the selloff was within an overall trading range.
- This means that the market may find sellers around yesterday’s close.
- The bears want a second leg down from the selloff that ended on May 24th; however, yesterday’s gap up lowers the probability for the bears.
- The market is in the middle of a trading range that has lasted almost two months. This means that traders should assume that the market is in breakout mode and that the directional probability is close to 50% for both the bulls and the bears.
- If the bulls or the bears had a probability advantage, the market would not be going sideways in the middle of a large trading range.
Emini 5-minute chart and what to expect today
- Emini is up 11 points in the overnight Globex session.
- The CPI Report was released at 5:30 AM PT. So far, the report has had a two-bar selloff and a sharp reversal. This is typically trading range price action following a report.
- Traders should assume that the U.S. Open will have a lot of trading range price action.
- Most traders should consider waiting for 6-12 bars. It is common for traders to be too aggressive on the open and take a few losses. The range can often contract after the open, making it difficult for one to make up losses from the open.
- The open is typically probing support/resistance, and if a trader waits for 6-12 bars, they gain the probability of catching the high or the low of the day. In general, traders should assume that the initial move on the open has a 50% chance of a reversal and an 80% chance of a minor reversal.
- Most traders should try and catch the opening swing that typically begins after the formation of a double top/bottom or a wedge top/bottom. This can provide great risk/reward for a trader looking to enter on a stop entry.
- Traders should pay attention to the day’s open, especially if the open is in the middle 1/3rd of the range.
- Lastly, today is Friday, so weekly chart support/resistance is important. It is common to see a surprise breakout late in the day as traders decide on the weekly chart’s close. This means the market gets a surprise breakout late in the day; they must not be in denial.
Emini intraday market update
- The Emini rallied, forming a bull trend from the open.
- The rally up to bar 18 was strong enough that the first reversal down was likely going to fail and lead to sideways trading.
- Although the selloff down to the moving average was strong, it was likely a minor reversal.
- The market ended up going sideways until the 11:00 AM PT when it formed a wedge bottom and rallied to a new high of the day around bar 62 (11:40 AM PT).
- The bulls want to reach the May 19 high (4,226) , however the target is probably too far away. Next, the bulls want the day to close on its high.
- The bears want the market go sideways to down and form a tail going into the close. As of 11:45 AM PT, the market is probably going to go sideways into the close.
Yesterday’s Emini setups
Al created the SP500 Emini charts.
EURUSD Forex market trading strategies
EURUSD Forex daily chart
- The EURUSD went one pip below the March 24th low before reversing up 40 pips.
- The market will probably fall further below the Mach 24th low. This was the bottom of a prolonged bull channel, so the odds favored buyers in this area.
- With the tight channel down from the May high, the odds are that the first reversal up will be minor and lead to sideways trading.
- The bulls have a possible parabolic wedge bottom with the May 15th, May 19th, and May 25th lows. This means the market may get a minor reversal up for a few legs. However, it is essential to remember that parabolic wedge bottoms are typically minor reversals that lead to bear flags (trading range or trend resumption down) than successful bull reversals.
- The bulls need to create more buying pressure before traders are convinced that the market will reverse up.
- The selloff from the May high is a breakout on a higher time frame, which means it will probably have a second leg down after and pullback.
- The market will probably pull back for a few legs and get closer to the moving average over the next few days.
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 host a live Q&A session tomorrow (5/27) starting at 12:00 PM PT/3:00 PM ET for Subscribers of Trading Room. Subscribers will be able to access the Q&A Session link just like they normally do for the trading room. The Q&A will be recorded.
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.
Why is bar 52 not marked as a buy or as a 20 GB buy? Its a DB which COH and its also a IB.
Also in the encyclopedia is bar 56 marked as the first bar with a high below de MA but this is also bar 52. And is this not a extra argument to buy bar 52? Because if bulls want to buy above the average price for a long time arent they willing to buy when the price is under the MA with a good looking SB COH which you can see as a H2 or a H3?