Emini Five Consecutive Bull Closes

Trading Update: Friday January 27, 2023

Emini pre-open market analysis

Emini daily chart

• The bulls managed to get a fifth consecutive bull close yesterday on the daily chart. While the bull bodies overlap, the bulls show signs of strength by getting five consecutive bull closes.
• With the daily chart having five consecutive bull closes and bodies, the odds are that today will close below the open of the day and end the bull streak.
• The market is trying to reach the December 13^th high, a major lower high for the bears. Although the December 13^th high did not lead to a new low in the bear trend, it is important.
• If the bulls can close above December 13^th, they will argue that the daily chart is now in a bull channel and no longer a bear channel
• The bulls have a higher low major trend reversal with the December 2022 low. While the bulls want the major trend reversal to lead to a bull trend, the reality is that most major reversal attempts fail and lead to more trading range trading.
• Traders should be mindful of the possibility of the bulls getting an upside breakout but be aware that the odds favor disappointment and more trading range price action.
• The bears want to form a double top with the December 13^th high. If the market begins to stall near the December 13^th high, more and more bears will begin to sell, trying to trap the eager bulls hoping for the upside breakout.
• The bulls have a possible early small pullback bull trend with the December 2022 low. The rally from the December 2022 low is forming possible gaps, such as the January 3^rd high and January 19^th low. While it is a negative gap, it is still a gap. The January 23rd high may lead to a measuring gap and trap the bears. That will increase the odds that the market will form another gap.
• The bears want to close these gaps and prevent the bulls from getting a measured move up.
• It is important to realize that small pullback trends are legs in a trading range that form gaps and breakouts and for a continuation of the trading range leg. This means that small pullback bull trends are never clear when they are forming until there is a clear breakout. However, signs of a small pullback rally are open/negative gaps and a tight channel.
• Overall, traders will pay close attention to the January 23^rd high to see if bulls and bears will sell above it or if the bulls are still eager to buy above the January 23^rd high. Most bears will wait for more selling pressure, increasing the odds of sideways trading for a few days.

Emini 5-minute chart and what to expect today

• Emini is down 10 points in the overnight Globex session.
• The market has been in a trading range since the start of the Globex session last night.
• The bulls want an upside breakout today and another bull close on the daily chart. The bears want the opposite and to end the five-day bull streak.
• Traders should expect a lot of trading range price action on the open. This means most traders should consider not trading for the first 6-12 bars of the day unless they are comfortable trading with limit orders and making quick decisions.
• Typically, there is a 50% chance of the low or high or the day forming after bar 6. This is why it is reasonable for traders to wait to place a trader after bar 6. If they look for a stop entry and a swing trade, they will have close to a 50% chance of catching the high or low of the day.
• Traders can also look for a double top/bottom, or a wedge top/bottom, before placing a swing trade. There is around an 80% chance of the open having a swing that begins before the end of the second hour and usually begins from one of the above-mentioned patterns.
• As I said above, the market will likely try and close below the open of the day. This means traders should pay close attention to the open.
• If the market is above the day’s open, traders should consider looking for a possible topping pattern, such as a double top or wedge top, and a reversal below the day’s open.
• While the odds favor a close below the open of the day, it is not a guarantee, which means if the market forms a strong upside breakout on the open, trades must not be in denial and have to find a way to get long.
• Lastly, today is Friday, so the weekly chart will be important, especially going into the final hours of the trading day. It is common for Fridays to get surprise breakouts up or down late in the day as institutions decide on the close of the weekly chart. This means it is important to be open to anything going into the day’s final hours.
• The weekly chart at the moment is closing on its high. The bulls want the day to say around the high of the week, and the bears want to create as big of a bear trend day as possible and damage the weekly chart body.

Emini intraday market update

• The market gapped down and rallied up to near the moving average.
• The bears got a reversal down from a parabolic wedge top at 7:10 AM PT (Bar 8). The bears saw this as a pullback from the gap down and expected a 2^nd leg down.
• The rally up to bar 8 was strong enough that there would probably be buyers below the day’s low, and the downside would likely be limited. This is why traders bought around bar 16 (7:50 AM PT).
• The selloff to bar 16 was in a tight bear channel which increased the odds of the first reversal up being minor. This is why the market tested down to the 16 low during bar 30 (9:00 AM PT).
• The bulls formed a truncated wedge bottom with the bar 30 low. The bulls are hopeful this will lead to the day’s low and at least two legs up.
• With all of the trading range price action today, the odds favor a bull trend or a trading range day.
• Traders should expect a trading range day to continue and pay close attention to the open of the day. With the daily chart having six consecutive bull closes, traders should assume that the day will close below the open of the day and end the bull streak on the daily chart.

Yesterday’s Emini setups

Al created the SP500 Emini charts.

Here are several reasonable stop entry setups from yesterday. I show each buy entry with a green rectangle and each sell entry with a red rectangle. Buyers of both the Brooks Trading Course and Encyclopedia of Chart Patterns have access to a much more detailed explanation of the swing trades for each day (see Online Course/BTC Daily Setups).

My 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 Emini.

EURUSD Forex market trading strategies

EURUSD Forex daily chart

• The daily chart of the EURUSD is in a small pullback bull trend, which is a breakout on the higher time frames like the weekly chart.
• The bulls want the small pullback bull trend to continue. However more likely that the market will begin to go sideways soon.
• The selling pressure is beginning to increase since the breakout above January 2^nd. This will increase the odds of a test of the moving average soon (blue line).
• I have said several times that the rally beginning in October 2022, is a major breakout of the tight bear channel that began back in mid – 2021 (see weekly chart). This means that while the October 2022 rally is a major reversal, the bulls will likely need to form a lower-high major trend reversal. This means that traders may want to see the market test at least the 1.040 price level before bulls will be eager to buy (see the purple line on the 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.

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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.

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