Trading Update: Wednesday February 15, 2023
Emini pre-open market analysis
Emini daily chart
- Yesterday formed a bull doji bar following Monday’s strong bull breakout bar.
- Emini sideways most likely despite bulls having done an excellent job reversing last Thursday’s bear breakout bar. Yesterday’s doji bar is a reminder that the market will go sideways rather than straight up.
- A doji is a hesitation bar; if bulls hesitate after a strong bull breakout bar, that is a sign of profit-taking.
- The bulls want aggressive buying after strong bull bars like Monday (February 13th). They do not want traders selling and taking partial profits after breakout bars.
- If traders are taking partial profits after strong bull bars, that means there is a lack of confidence and certainty in the upside, which will increase the probability of more sideways trading.
- Once the bears become more confident that the rally from February 10th is a leg in a trading range and not a strong rally, they will begin selling short for scalps.
- The bears want to try and create a bear inside the bar today and increase the selling pressure on the daily chart.
- The odds are that the bulls will get at least a small second leg up, and the market will have to rally above yesterday’s high at some point.
- Overall, the market is deciding if the past nine trading days is going to be a bull flag or a reversal that will test down to 4,000 and the January 31st high. At the moment traders should expect more sideways trading over the next few days.
Emini 5-minute chart and what to expect today
- Emini is down 19 points in the overnight Globex session.
- The Globex market has been in a trading range for most of the overnight session.
- The 5:30 AM PT report broke to the downside and tested near yesterday’s low and is now reversing up.
- Traders should expect the open to have a lot of trading range price action.
- As I often say, most traders should wait for 6-12 bars before placing a trade. The open usually have a lot of limit order trading, making it easy to get trapped betting on breakouts.
- Since most days go sideways for the first 6-12 bars, the risk of missing a swing trade is not that great.
- Most traders should wait for a credible double top/bottom or a wedge top/bottom and try to catch the opening swing trade that typically begins at the end of the second hour.
- The single most important thing on the open is to be patient.
- It is easy to be excited to trade on the open, and while it often yields the most significant profit potential, there is also the greatest amount of uncertainty. By waiting for at least 6 bars before trading, one can greatly improve their odds of finding a swing trade.
- Traders should be mindful that the day may try and form an inside day with yesterday’s range.
- Overall, until there is a clear, strong breakout with follow-through, it is better to assume the market will have a lot of trading range trading.
Emini intraday market update
- The market gapped down and formed a two-legged rally to bar 4.
- Bar 5 was a surprise bar. A gap is a breakout, and most breakouts have 2nd legs, therefore, this lowered the probability of bar 1 being the low of the d. Thus, the odds favored an attempt at a second leg down after the gap.
- Although bar 5 was a big bar, it was climactic and at support (bar 1 low). The buying pressure on the first 4 bars lowered the probability of the bears getting a measured move down of bar 5, which is why many traders scalped out after the second leg down (bar 9).
- The market formed a credible wedge bottom on bar 9 (7:15 AM PT) and rallied back to the high of bar 1.
- At the time of writing this (7:40 AM PT), the market is deciding on getting a measured move of the opening range projecting up (Bar 9 low to bar 1, projecting up).
- The range is around 20 points, and it will likely double at a minimum. Traders should look for a breakout above or below the opening range.
Yesterday’s Emini setups
Tim created the SP500 Emini chart from Al’s provided summary
EURUSD Forex market trading strategies
EURUSD Forex daily chart
- The bulls tried to reverse the market up after the February 13th 2nd entry buy below the moving average. However, most bulls scalped out yesterday, and the entry bar closed as a weak doji.
- The bears will see yesterday as a second-entry sell. However, it is a bull bar forcing traders to sell in the middle of a 7-bar tight trading range which is not ideal.
- There are probably buyers not far below, and the market will likely have to rally and form a lower-higher major trend reversal.
- Most successful major trend reversals take several attempts, and while the bears have done a good job with the three consecutive bear bars that began on February 2nd, most traders want to see how eager the bears are to sell again on a test back to the highs.
- This means that most bears would rather sell a lower high major trend reversal, which makes me think there are more buyers down here than sellers.
- Overall, the market will probably have to go sideways over the next week, test the highs, and form some kind of topping pattern, such as a higher or lower high major trend reversal.
Summary of today’s S&P Emini futures price action and what to expect tomorrow
Tim created the SP500 Emini chart from Al’s provided setups & summary
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 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.
I have a question, why on bars 14 and 15 we didn’t have a sell, with a possible DT, wedge top and at 15 bars good SB.. Thanks for your attention
Good question and yes, you could easily see a Low 2 at that point, a double top trading range reversal setup.
Looking at it from an opposite view (ie why is this trade bad?), you can see the strong leg up to that point, from a strong wedge bottom reversal, plus tail on bottom of bar 14 is enough to be cautious, and wait.
As a trading range reversal trade is usually a scalp, it worked if you were quick enough to get out, but the bulls were clearly in control from the start of the day (if only seen in hindsight, of course!). 🙂
Thank you such much!
Thank you Brad I love you all. God bless you and Brooks too. Tks
Uhh, great Brad. Thank you so much for your repetition again and again every day, You know the key. That helps me a lot to get better every day. I appreciate your effort
That is great to hear, I am happy to hear that are helping you.