Emini stalling at November and December highs

Trading Update: Thursday January 13, 2022

Emini pre-open market analysis

Emini daily chart

• Emini reversed up strongly on January 10 and had strong follow-through on January 11. The odds are we will go higher, but Emini stalling at the November 22 and December 16 highs, which is an area of resistance.
• The bulls are hopeful the market will race up to January 4 All-Time High. However, the market is forming a trading range on the daily chart, increasing the chances of bulls getting disappointing soon.
• There will be bulls who bought the December 27 close betting on a 2^nd leg up and may have held through the selloff down to January 10. Those bulls are likely disappointed and will use this rally to exit. Some who scaled in will use this bounce to exit breakeven between their two entries, while others may hold for a test of the December 27 high.
• The bears are still expecting a 2^nd leg down from the selloff to the January 10 low even if we get to a new all-time high first before having the 2^nd leg down.
• The Bears see the market in a large wedge on the daily chart (First push September 2nd, Second push November 5 or 22, and third push December 28). The bear will expect a 2^nd leg down from this Wedge which would likely take us down to the December or October lows or 2021. If we get a new all-time high first, the bears may see a new wedge, with the first push being November 5 or 22, the second push as December 28, and the third push being the new All-time high. We will probably get two legs down to the December or October 2021 lows if this happens.
• January 12 was a disappointing bar for the bulls and a 66% (4729.75) retracement for the bear selloff. The bears are hopeful they will get a Lower high and a selloff down to the December 2021 or October 2021 lows before the market reaches a new all-time high. The odds are around 40% this will happen without testing higher. Also, January 12 is a L1 short with a bad signal bar, so if the market falls below it, we will likely soon find buyers for a 2^nd leg up following the January 10–11 rally. 
• Overall, we will likely get down to the December and October 2021 Lows before the first haif of the year is over, whether or not the market makes a new all-time high.  

Emini 5-minute chart and what to expect today

• The Emini is up 10 points in the overnight Globex session.
• Yesterday was a Doji day, so and will probably test above or below the prior day’s range at some point 
• Most traders will be neutral going into the open and will look for a strong breakout with follow-through or a credible 2^nd entry setup before committing to a swing trade.
• The market is at resistance on the daily chart November 22 and December 16, increasing the odds of more trading range during today’s session and a possible selloff down to yesterday’s low (4696.75).
• Overall, most traders will expect breakouts to fail until there is a strong breakout with follow-through.

Yesterday’s Emini setups

Al created the SP500 Emini charts.

Here are several reasonable stop entry setups from yesterday. 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 much more detailed explanation of the swing trades for each day (see Online Course/BTC Daily Setups).

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 Forex market is getting the breakout of the 8-week tight trading range yesterday.
• Today looks it will be decent follow-through after yesterday’s strong breakout.
• Bulls are hopeful today will close as a strong follow-through, increasing the odds to 60% that the bulls get a 200 pip measured move up.
• If today reverses down and the bulls get bad follow-through, traders will still see this eight-week tight trading range as a final bear flag and expect a reversal below the range to fail and reverse up.
• So far, the bulls have a good case for this leading to a strong trend reversal and a rally up to the October and September highs, but they need follow-through.

Summary of today’s S&P Emini futures price action and what to expect tomorrow

End of day summary

• The Emini sold off from above the November 22 high on the open.
• It then traded down in a bear channel all day to below a 50% retracement of the 3-day rally.
• The bears need strong follow-through selling tomorrow to convince traders that the Emini is reversing down on the daily chart from a lower high major trend reversal after a 4-month wedge top. Without that, the odds still favor a new high before a break below the December low.

See the weekly update for a discussion of the price action on the weekly chart and for what to expect going into next week.

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Trading Room

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 trading room. We offer a 2 day free trial.

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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.

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