Trading Update: Wednesday February 23, 2022
Emini pre-open market analysis
Emini daily chart
- Yesterday was a weak reversal up from a double bottom higher low major trend reversal with January 28 low.
- If the bulls get consecutive bull bars closing above the February 9 high, they would then likely get a break above the January high before a break below the January low.
- If this week reverses up, it is more likely that this will be another minor reversal in the 7-month trading range.
- Traders will look for a reversal down from below the February 9 high or from a double top with that high.
- There would then be a head and shoulders top bear flag where the January 26 high is the left shoulder and the February 9 high is the right shoulder.
- The odds still favor a break below the January low before a break above the January high because of the back-to-back OO (consecutive outside bars) on the monthly chart.
- Since yesterday was a bear doji bar, it is a weak buy signal bar for today. That reduces the chance of a strong rally over the next several days. There may be more sellers than buyers above yesterday’s high.
- However, because yesterday reversed up from the important support of the January 28 low, there might be some follow-through buying today or tomorrow.
Emini 5-minute chart and what to expect today
- Emini is up 20 points in the overnight Globex session.
- Yesterday’s late rally from the January 28 low was a Major Bull Surprise on the 5-minute chart. That means it was strong enough to affect the next several days. It increases the chance of sideways to up trading today and tomorrow.
- But with the close in the middle of the day’s range, the bulls will buy early consecutive big bull bars closing near their highs if the follow-through is going to be up instead of sideways.
- The bears are hoping yesterday was just a pause at support. They would like the 2-week bear trend to resume today, but the odds favor at least a couple hours of follow-through buying in the 1st half of today.
- If the bear trend is going to resume today, the bears will have a better chance later in the day. That means that any early selling today will more likely be a bear leg in a trading range than the start of a bear trend.
Yesterday’s Emini setups
EURUSD Forex market trading strategies
EURUSD Forex daily chart
- Double bottom higher low major trend reversal.
- Double bottom bull flag with February 22 low and truncated wedge bull flag with February 8 and 14 lows
- Yesterday was only a bull doji and it is therefore a low probability buy signal bar.
- 3-week selloff lacks consecutive big bear bars closing near their lows. More likely bull flag than bear trend.
- Traders should expect at least a couple months of sideways to up trading, and the January low is probably the start. However, the EURUSD has been sideways for a couple weeks and it might trade more sideways to down before the bulls get a 2nd leg up from the February 2 rally.
- The EURUSD has been in a trading range for 4 months. It is therefore in Breakout Mode.
- But the yearlong bear trend lasted a long time, given that it was within an 8-year trading range. It is still probably only a pullback from the 2020 rally. Also, the January 28 low is a test of support at the June 26 low. Finally, the February 2 rally was strong. These factors give the bulls a 60% chance of a 2nd leg up.
- However, a couple big bear bars closing near their lows will make a break below the January low more likely.
Summary of today’s S&P Emini futures price action and what to expect tomorrow
End of day summary
- Today gapped above yesterday’s close, but reversed down from an ii and a Low 2 top.
- The day began as a Bear Trend From The Open.
- The bulls got a big minor reversal up after a parabolic wedge.
- The rally reversed down from a 50% retracement of the selloff on the open. This was a failed attempt at a bull trend reversal.
- It sold off for the rest of the day in a Small Pullback Bear Trend.
- I have been saying all month that the Emini would break below the January low before breaking above the January high because of the back-to-back OO patterns on the monthly chart. Today got to within a few points.
- The Emini might break below it tomorrow, and it might even gap down below it.
- That low is the neckline of a head and shoulders top on the daily chart (November 22 is the left shoulder and February 2 is the right shoulder).
- The bulls hope for a sharp reversal up tomorrow, which would be from a double bottom with the January low.
- The bears want a strong break below that low and then a measured move down to around the pre-pandemic high.
- I have been saying that this selloff probably would continue down to below the 4,000 Big Round Number. There is a gap below the April 2021 low on the monthly chart that is also a magnet.
- There is currently only a 30% chance that the selloff will reach the February 2020 pre-pandemic high.
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.