Trading Update: Wednesday January 18, 2023
Emini pre-open market analysis
Emini daily chart
- Emini formed a bear bar yesterday, ending the streak of four consecutive bull closes on the daily chart.
- The channel up beginning in late December of last year is tight, increasing the odds that the first reversal down will fail and lead to more sideways trading.
- The bulls are hopeful that yesterday is just a retest of the January 9th breakout point and that the gap above the January 9th high will stay open. If the gap stays open, that will increase the probability of a measured move up from the December 28th low to the January 9th high, which projects up to the December 13th high.
- The bulls want the December 28th low to be a higher low major trend reversal that leads to a strong breakout above the December 13th high.
- The bears want the rally to stay below the December 13th high. They want to continue with lower prices and get a new low below the October 13th low.
- The market is near the 4,000 big round number and may stall here and begin to go sideways. The 4,000 round number has been a magnet for the past seven months and will likely continue to be a magnet in the future.
- Overall, the bears need to develop more selling pressure, or the odds will continue to favor the bulls slightly. At the moment, the odds favor a second leg up from the January rally.
Emini 5-minute chart and what to expect today
- Emini is up 16 points in the overnight Globex session.
- The Globex market has been in a trading range for the past several days.
- The 5:30 AM PT report resulted in a big doji bar on the 5-minute and 15-minute charts. This increases the odds of confusion and more sideways trading on the open.
- With the lack of a very large gap up or down, most traders should be neutral going into the report and assume the open will have a lot of sideways trading.
- As I often say, most traders should consider not trading for the first 6-12 bars on the open.
- Traders can also consider waiting for a swing trade and look for a double top/bottom or a wedge top or bottom. It is common for most to form one of the above patterns right before there is a swing trade.
- Traders should remember that there is around an 80% chance of a swing trade beginning before the end of the second hour.
- If a trader wants high probability, they can wait for a clear breakout with follow-through, breaking out beyond support or resistance. At that moment, there would be at least a 60% chance of a second leg in the direction of the breakout.
Emini intraday market update
- No intraday update today.
Yesterday’s Emini setups
Al created the SP500 Emini charts.
EURUSD Forex market trading strategies
EURUSD Forex daily chart
- The EURUSD is beginning to form more selling pressure as the bears try and create a failed breakout of the January 2nd high.
- The channel up from the January 6th low is tight, which increases the probability that the first reversal down will fail.
- At the moment, the odds are that the bulls will fail above January, and the market will fall back into the month-long trading range.
- Most bears will wait for more selling pressure before looking to sell here.
- The bulls want a measuring gap with the January 2nd high. However, at the moment, the odds are against it.
- Traders should expect the next several weeks to lead much sideways trading. This is partly due to the higher time frames, such as the weekly chart. The rally from the October 2021 low is the first major break of the tight bear channel that began in 2021.
- Most breakouts of tight channels lead to sideways trading and typically need to form a higher low major trend reversal. This means that the bulls will likely need at least a 300-pip pullback to around 1.0500 before the bulls have a credible higher low major trend reversal. +
- The pullback could be much lower than 1.0500, before the bulls get a credible higher low on the weekly chart.
Summary of today’s S&P Emini futures price action and what to expect tomorrow
Al created the SP500 Emini charts.
End of day review
- I will update at the end of the day.
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. 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.