Trading Update: Wednesday January 12, 2022
Emini pre-open market analysis
Emini daily chart
- Monday reversed up strongly from the bottom of the 20-week EMA and the bull trend lines on the daily and weekly charts. It was also a test of the 100-day MA and the 4,600 Big Round Number.
- Yesterday triggered the buy signal by going above Monday’s high. It was a big bull bar, a strong entry bar, and it increases the chance of higher prices over the coming days.
- The bulls are hoping that the rally will race up to a new high, like after the December 20 bottom.
- However, this bottom followed a stronger selloff. The rally might stall for at least a couple days around the November 22/December 16 double top.
- Whether or not it stalls, a new high is more likely than a strong break below the December low.
- But there should be a reversal down to below the December low and possibly the October low within the 1st quarter because the channel on the daily chart has been forming deep pullbacks since October. That increases the chance of a couple legs down to a prior higher low, like the December or October low.
Emini 5-minute chart and what to expect today
- Emini is up 18 points in the overnight Globex session, gapping above yesterday’s high. If there is a small gap, it will probably close in the 1st hour.
- Yesterday was a buy climax day. There is a 75% chance of at least a couple hours of sideways to down trading that starts by the end of the 2nd hour.
- Yesterday was a Spike and Channel bull trend. There is a 75% chance of a break below the bottom of the channel and then the evolution into a trading range. The bottom of the range is often at the start of the channel, which is around 4675.
- The bulls have a 25% chance of a strong breakout above the channel and the transition into an even stronger bull trend without first trading sideways to down for a couple hours early today.
- There are important magnets above that are within reach. These include the November 22/December 16 double top, and last week’s low. The Emini should reach both this week, but it might pull back for a day or so first.
Yesterday’s Emini setups
EURUSD Forex market trading strategies
EURUSD Forex daily chart
- The EURUSD Forex market is finally beginning to break above the tight trading range that it has been in for 8 weeks.
- I mentioned a few times that it might go sideways to the bear trend line before breaking out. Today also is beginning to break above the bear trend line.
- If today remains a big bull day on the daily chart, there will be a breakout. The more it closes on its high and the further it closes above the range and the bear trend line, the more likely a 2-month rally to the October or September highs is underway.
- Even if today remains a strong bull day, traders will want to see a bull follow-through day tomorrow. If it is also a big bull day, there will be a 60% chance that the breakout will go up for at least a 200-pip measured move.
- If today or tomorrow reverses down strongly, traders will conclude that the breakout has failed. They will then look for a breakout below the range.
- But even if there is a breakout below, it will probably fail and reverse up within a few weeks.
- A tight trading range late in a bear trend usually is the Final Bear Flag. Traders should then look for a reversal up that could last 2 or more months.
- There has been subtle buying pressure in the tight trading range over the past few weeks. The tiny higher lows and highs slightly increase the chance of a bull breakout.
- Remember, I have been saying that there is an increased chance of a trend reversal in early January. This might be it.
Summary of today’s S&P Emini futures price action and what to expect tomorrow
End of day summary
- Gap up but sold off strongly from wedge top at November 22 high.
- Remember, I said that today would have at least a couple hours of sideways to down trading, and that it might stall for a few days around the November 22 high.
- After a wedge bottom around yesterday’s close, the Emini bounced and entered tight trading range.
- The Emini closed just below the open. and today is therefore a doji bar on the daily chart. It is a weak sell signal bar and there will probably be buyers not far below today’s 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.
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.
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.