Trading Update: Thursday February 17, 2022
Emini pre-open market analysis
Emini daily chart
- The Emini is in the middle of a 7-month trading range; therefore, it is neutral. There is a 50% probability of a bull breakout and a 50% probability of a bear breakout.
- There have been many reversals up and down that have been strong, making the market look confusing and disappointing. Those are the two main characteristics of a trading range.
- It is important to remember that every trading range has a reasonable buy and sell setup.
- The bulls have a double bottom with the January lows. The bears want any rally to form a double top and lead to a major trend reversal.
- As Al has mentioned several times, the monthly chart has consecutive outside bars (OO pattern), which makes the odds slightly more that the market has to fall below the January lows before going above the January high.
- Because last month’s bar on the monthly chart is so big, this month might be an inside month, and the breakout below or above the January high would be in March or April.
- Overall, it is best to assume the daily chart is neutral and expect more trading range price action.
Emini 5-minute chart and what to expect today
- Emini is down 20 points in the overnight Globex session.
- The Emini has been sideways and now is in the middle of the range created over the past 3 days.
- The market had several big swings overnight up and down, and each one led to a reversal.
- Traders will likely expect more trading range price action on the open and look to fade breakouts. Traders will look for a strong breakout with follow-through or a credible stop entry for a swing trade.
- If today is a trading range day, there should be at least one swing up and one swing trade down.
Yesterday’s Emini setups
Al created the SP500 Emini charts.
EURUSD Forex market trading strategies
EURUSD Forex daily chart
- Tuesday was a buy signal bar for the bulls and can be viewed as a high 1 or high 2, depending on how one views it.
- So far, the market has gone sideways for the past 9 days creating trading range price action. This will cause more traders to bet on reversals than successful breakouts.
- At the moment, the odds are that the 9 days sideways to down price action is more likely a pullback from the February 4 rally. This means the odds are that the market should attempt to get above the highs of February soon.
- The bulls are hopeful that Tuesday is a higher low major trend reversal and the start of that second leg up.
- The bears are hopeful this rally over the past two days is a pullback from the January/February double top, and the market will work its way down to the January lows.
- The odds are that the market is going to trend up on the daily chart for a couple of months, reaching the October high.
Summary of today’s S&P Emini futures price action and what to expect tomorrow
Al created the SP500 Emini charts.
End of day summary
- Today was a trend from the open bear trend. The market became Always In Short during bars 3-5.
- The bulls tried to reverse the market after the first hour of the day, and the market ended up leading to a trading range for the next 2 hours.
- After the 2 hours of sideways, the market was in breakout mode, which means the probability of the market going up or down was close to 50% for each side. However, the odds slightly favored the bears.
- The market ended up forming a small pullback bull trend that broke below the trading range during bar 56 and ended up forming a measuring gap that led to a measured move down
- Small pullback trends are difficult to trade because they start out looking like a leg in a trading range but keep forming gaps. Then you see a leg in what looks like a trading range forming gaps. In general, It is better to wait for sideways or for gaps to start closing before looking to buy.
See the weekly update for a discussion of the price action on the weekly chart and for what to expect going into next week.
Traders can see the end of the day bar-by-bar price action report by signing up for free at BrooksPriceAction.com. I talk about the detailed S&P Emini futures price action real-time throughout the day in the BrooksPriceAction.com on trading room days. We offer a 2 day free trial.
Charts use Pacific Time
When I mention time, 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.