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Emini Bears Want to Trap Bulls Buying January 17 High

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Trading Update: Tuesday January 24, 2023

Emini pre-open market analysis

Emini daily chart

  • The Emini gapped up yesterday and closed slightly above the January 17th high. However, bears want to trap bulls buying the January 17th high.
  • The bulls hope the past two trading days are strong enough to have a second leg up and test up to the December 12th high.
  • The bulls really need one more bar to convince traders that the bears are trapped, and the market is likely going higher.
  • The bears will sell above the January 17th high, betting that yesterday is a pullback and will lead to a failed bull breakout.
  • Yesterday’s high stalled at the December 12th close, which will likely be a line of resistance. Some traders bought the December 12th close and got trapped on the way down to the December low. While most of those bulls buying the December 12th close would have taken a loss after December 13th or 15th, it was reasonable for bulls to scale in lower, though, and those bulls started selling out of longs back at their original entry price (December 12th close) yesterday.
  • If the bears can get a strong bear bar closing on its low, bears will argue it is a wedge top with January 9th, January 17th, and January 23rd.
  • The bulls need another follow-through bar to trap the bears selling the high of January 17th. The bears need to get a strong sign of strength today and trap the bulls into buying a failed breakout above the January 17th high. Traders should assume confusion and sideways over the next few days; however, they should be open to a strong bull or bear close today.

Emini 5-minute chart and what to expect today

  • Emini is down 18 points in the overnight Globex session.
  • The Globex market has been going sideways In a 20-point trading range for most of the overnight session.
  • At this time, the Globex market is breaking out to the downside and below yesterday’s end-of-day selloff.
  • With the past two days having a lot of small pullback bull trend price action, the odds are lower that today will also be a small pullback bull trend.
  • Traders should expect a lot of trading range trading today, which means both bulls and bears will likely be repeatedly disappointed.
  • As I often say, traders should consider not trading the first 6-12 bars as failed breakouts are common, and losing money during the first hour is easy. If a trader is comfortable making quick decisions, they can trade for the first hour.
  • Most traders should look for consecutive strong trend bars on the open with at least one closing on their extremes to make the market buy or sell the close. At that point, the odds would favor a second leg after the breakout.
  • In general, it is better to wait for the follow-through after the breakout because it will increase the odds of a second leg and lower the probability of it being a failed breakout and a track.  
  • Traders can also consider waiting for a credible double top/bottom or a wedge top/bottom before looking to place a trade. Typically, there is an 80% chance of a swing trade starting before the end of the second hour, and it usually comes from one of the patterns mentioned above.
  • The more important thing on the open is to be patient and not rush to trade. As Al Brooks often says, “a trade is never overdue.” This means traders must be comfortable with not trading if the market conditions are not ideal for that trader.
  • Lastly, traders should pay close attention to the open of the day. If today is going to have a lot of trading range price action, the open of the day will likely stay around the middle of the day’s range and be tested frequently.

Emini intraday market update

  • The Emini has been in a trading range for most of the opening session.
  • The bulls got three consecutive bull bars on bars 3-5.
  • Bar 4 completely reversed the rally, leading to a new low of the day.
  • The rally up to bar 5 made a bear trend unlikely, so the selloff below bar 3 was likely to lead to more trading range price action and not a bear trend.
  • As of 8:30 AM PT (Bar 24), the market is always in long and in a trading range.
  • The bull are hopeful the market will get a measured move up from the open of bar 2 to the close of bar 3, which projection up to the 4,047 price level.
  • Overall, traders should expect the upside to be limited and not to last all day. More likely, the rally from the 8:00 AM PT low will end up being a bull leg in a trading range. This means traders should look for a bear leg to last a couple of hours in a trading range. The bear leg may not start until the middle of the day (bar 40).

Yesterday’s Emini setups

Emini small pullback bull trend from the open ended with exhaustive buy climax but 20 gap bar buy signal at EMA. Bears want to trap bulls going forward.

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

EURUSD Daily: Bulls Want Channel to Continue
  • The EURUSD is forming a lot of overlap with the past eight trading days in a tight trading range.
  • The bulls want the channel (blue line) to continue; however, the overall rally is beginning to form a lot of selling pressure.
  • The bulls hope that the breakout from the January 6th low will lead to a measuring gap; however, more likely, the upside will be limited, and the market will break below the January 2nd low and continue to go sideways inside the larger December trading range.
  • The market will probably go sideways to down over the next several weeks and test the higher low major trend reversal target at 1.044 (see chart). The weekly chart has been in a tight bear channel since the middle of 2021, and the rally from October 2022 is the first major trendline break. Most major trend reversals have at least a 30% pullback before forming a higher low, which would be a pullback to 1.044 on the daily chart.

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

Emini bear trap and higher low double bottom

Al created the SP500 Emini charts.

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.

Trading Room

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.

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