Trading Update: Monday February 6, 2023
Emini pre-open market analysis
Emini daily chart
- The Emini sold off late last Friday and closed as a weak bull trend bar.
- The bulls have a decent breakout with follow-through above the December 13th high. However, the past 10 out of 12 bars have had bull closes, which is climactic behavior. This will increase the odds of an Emini likely close below open today or tomorrow.
- The bears want the breakout above the December 13th high to fail.
- If the bears can get enough selling pressure, it will increase the odds of a test of the January 30th low.
- While the odds favor a pullback lasting a day or two, the odds also favor the bulls getting a second leg up. The rally up to February 2nd was strong enough to get a second leg up likely.
- Some of the bulls who bought the February 2nd follow-through bar were disappointed by last Friday’s gap down, and they sold out of longs during the test of the February 2nd close.
- Since the daily chart is in a trading range, this will increase the odds of the bulls being disappointed with any potential second leg up following last week’s breakout.
- Overall, traders should expect sideways over the next couple of days as traders decide if last week’s breakout will have a second leg up. At the moment, the odds favor the bulls getting a second leg up after any pullback.
Emini 5-minute chart and what to expect today
- Emini is down 30 points in the overnight Globex session.
- The Globex market has been in a bear channel for most of the overnight session.
- The Globex session had a bear breakout around 3:00 AM PT. However, the bulls were able to get a strong pullback around 5:00 AM PT.
- The strong selloff and reversal down increase the odds of more sideways and trading range price action on the open.
- Traders should consider not trading the first 6-12 bars unless they are comfortable with limit order trading.
- Traders can also consider waiting for a credible stop entry swing trade in the form of a double top/bottom or a wedge top/bottom.
- Traders should pay close attention to the open of the day since the odds favor a close below the open today or tomorrow.
Emini intraday market update
- The market gapped down and went sideways for the first 9 bars of the day.
- The first 9 bars had decent bull bars closing above their midpoints, which reduced the chances of the day being a strong bear trend day.
- Because the market had a gap down, the odds favored the bears getting at least a small 2nd leg down after the opening gap down, which is what happened on the selloff to bar 12.
- The bulls got a strong reversal up to the moving average around bar 18 (8:00 AM PT).
- I am writing this at 8:30 AM PT, and the market is Always In
- Long, and likely seen the low of the day. Traders should expect the first reversal down to find buyers and lead to sideways to up trading.
- The bulls will try to get a measured move up of the range of the opening 12. However, the selling pressure is probably too great, and the upside will likely be limited.
- The bulls want today to be a High 1 buy signal closing on its high on the daily chart.
- Traders should be prepared for the market to go sideways for several hours and decide on trend resumption or trend reversal, starting around 11:00 AM PT.
Friday’s Emini setups
Al created the SP500 Emini charts.
EURUSD Forex market trading strategies
EURUSD Forex daily chart
- The bears got a strong bear breakout last Friday, and now they have two consecutive bear trend bars.
- The downside breakout is strong enough to get at least a small second leg down.
- The market is now in a trading range and may have to test down close to the January 6th low.
- While the bulls did a good job forming a small pullback bull trend, because of the weekly chart, the odds were against the small pullback trend lasting for a long time.
- The weekly chart will likely need to form a higher low major trend reversal, which means the daily chart will have to test down lower.
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
- The Emini gapped down and went sideways in a trading range for most of the day.
- The market sold off, forming a wedge bottom around the day’s low, and rallied to a new high of the day around 10:30.
- This was a big up, big down open that increased the odds of the market going sideways for the rest of the day.
- The reversal up around bar 12 was strong enough that there would likely be buyers below any pullbacks scale in lower, which is why the selloff failed around 7:00 AM PT, and the market reversed up.
- Overall, today was a trading range day. It is important to look to sell in the upper 1/3rd of the range after 2-3 legs up. The opposite goes for the bottom of the range.
- The bulls got another bull close on the daily chart, which increases the odds of tomorrow getting a bear close below the open.
See the weekly update for a discussion of the price action on the weekly chart and for what to expect going into next week.
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.