Trading Update: Monday April 24, 2023
S&P Emini pre-open market analysis
Emini daily chart
- The Emini Daily Chart closed as a small doji bar last Friday. Price is testing the midpoint of the nine-day tight bear channel that began on April 5th.
- Emini oscillating around 4,150 for most of April. Traders see this price level as a fair price.
- The bulls want last Friday’s pullback to lead to a double bottom and a test of the February 2nd high.
- The bears want the opposite. They want the bulls to give up and for the market to test the March 22nd high and ultimately a test down to the March 13th low.
- The market is Always In Long, so the probability slightly favors the bulls. However, if the bulls had a significant probability advantage over the bears, the daily chart would not be in a tight trading range since April.
- Most traders should wait for a clear breakout with follow-through and then decide if the breakout will succeed or fail.
- It is important to realize that the daily chart is close to neutral probability. When a market is in a tight trading range, traders view that range as a fair price. The midpoint of the April range is around 4,150.
- It is common for tight trading ranges to form in the middle of two important magnets. The April range oscillates around 4,150, and there are two important magnets 150 points above and below.
- These magnets are the 4,000 big round number and 4,300. The 4,000 round number has been significant for over a year, which means the market sees that price level as fair. The 4,300 round number is from the March 13th low to the March 22nd measured move projection.
- This means that the market is deciding if it is going to rally 150 points higher and test 4,300 or if the market is going back to the 4,000 big round number. As I said above, traders should assume the probability is nearly 50%.
Emini 5-minute chart and what to expect today
- Emini is up 1 point in the overnight Globex session.
- The Globex market sold off during the overnight session and formed a reversal during the early morning hours.
- The reversal up is strong enough to likely get a second leg up and increase the odds of today forming a bull trend or a trading range during the U.S. Session.
- As I often say, traders should assume the open will have a lot of trading range price action. This means that most traders should consider waiting for 6-12 bars before placing a trade.
- The first hour often has a lot of failed breakouts, and by waiting for the first 6 bars, a trader gains certainty on the type of day.
- Most traders should try and catch the opening swing trade that typically begins before the end of the second hour.
- It is common for the opening swing trade to begin after forming a double top/bottom or a wedge top/bottom.
- Overall, traders should assume a trading range is likely until they are proven otherwise.
- Trader should be open to a possible bull trend day due to the daily chart. However, if today is going to be a bull trend, there will be plenty of time to buy after the market has formed a strong breakout with follow-through, so there is no rush.
Friday’s Emini setups
Al created the SP500 Emini charts.
Here are several reasonable stop entry setups from Friday. 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 near 4-year library of more detailed explanations of swing trade setups (see Online Course/BTC Daily Setups). Encyclopedia members get current daily charts added to Encyclopedia.
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 EURUSD is trying to reverse up to the April 13th high close. It was reasonable for the bulls to buy the April 13th close and scale in lower.
- Traders are waiting to see how disappointed the bulls are. If the bulls are eager to exit back at the April 13th close, it will create a resistance level as both bulls and bears begin to sell at that price.
- If the bulls buy more at the April 13th close, it would trap the bears selling at the April 13th close, and the market could breakout above the range.
- More likely, the market is transitioning into a trading range. This means that there are probably sellers above, scaling in higher.
- The bears are beginning to form bear bars closing on their lows, which is good. However, the bears need to start getting closes below the moving average (blue line).
- At the moment, the bulls have more than 20 bars completely above the moving average, which is a sign of strength and a warning that the bulls are probably still in control.
- If the bears can prevent a successful breakout above the April high, it would not take much for traders to decide that the past two months is a trading range. This would likely lead to a test of the midpoint of the past two months.
Summary of today’s S&P Emini futures price action
Al created the SP500 Emini charts.
End of day video review
Live stream video review with Al Brooks. Here is YouTube link:
Al Brooks – Emini End of Day Review for Monday April 24, 2023
See the weekly update for a discussion of the price action on the weekly chart and for what to expect going into next week.
Trading Room
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.
Appreciate the bar by bar commentary as always Al and Team.
I have a question, I was watching the market last night (Aus time zone).
I am confused as to why after the Major Bear Surprise (bars 13-15) we are calling bar 16 a High 1 and as we continue to go lower, we are calling these bars as High 1 and High 2 etc.
I was reading these as Low 1 and Low 2 and looking for short entries? And now since the chart summary has been posted I can see the short entries as Al has listed – as I had been reading them (however, the notes say High 1 and 2) and watching the summary video Al also refers to them as High 1 and 2.
Since we have a Bear Surprise and we are moving lower, are we not looking to for short entries (L1 and L2 leading to a possible MM) and only when we see a bottom Wedge/DB MTR are we looking to change and go long? (ignoring counter trend entries for the moment)
Please forgive my ignorance, but can someone please clarify?
Al said that despite the bear surprise he was looking for a trading range day and did not expect the market to go much lower. That strong reversal bar at the low was at a level where bulls bought before and thus a good setup for the LOD. Since that move down was a likely leg in a trading range and would be followed by a rally, you can count the long setups H1, H2 etc. looking for a buy.
Thanks for clarifying Andrew, appreciate it.
Thanks Al for the commentary video. Always eager to hear your insights on the day.