Emini Bulls Likely to Use First Reversal to Exit Longs

Table of Contents

Trading Update: Friday May 26, 2023

S&P Emini pre-open market analysis

Emini daily chart

The Emini gapped up and rallied, forming a doji bar on the daily chart. There were bulls who bought below May 22^nd and got trapped on the following bar. These bulls will likely use first reversal to exit longs (or any bounce) with a smaller loss.
While the bears did an excellent job getting selling pressure with the recent four-bar bear micro channel that ended on May 24^th, the selloff was within an overall trading range.
This means that the market may find sellers around yesterday’s close.
The bears want a second leg down from the selloff that ended on May 24^th; however, yesterday’s gap up lowers the probability for the bears.
The market is in the middle of a trading range that has lasted almost two months. This means that traders should assume that the market is in breakout mode and that the directional probability is close to 50% for both the bulls and the bears.
If the bulls or the bears had a probability advantage, the market would not be going sideways in the middle of a large trading range.

Emini 5-minute chart and what to expect today

Emini is up 11 points in the overnight Globex session.
The CPI Report was released at 5:30 AM PT. So far, the report has had a two-bar selloff and a sharp reversal. This is typically trading range price action following a report.
Traders should assume that the U.S. Open will have a lot of trading range price action.
Most traders should consider waiting for 6-12 bars. It is common for traders to be too aggressive on the open and take a few losses. The range can often contract after the open, making it difficult for one to make up losses from the open.
The open is typically probing support/resistance, and if a trader waits for 6-12 bars, they gain the probability of catching the high or the low of the day. In general, traders should assume that the initial move on the open has a 50% chance of a reversal and an 80% chance of a minor reversal.
Most traders should try and catch the opening swing that typically begins after the formation of a double top/bottom or a wedge top/bottom. This can provide great risk/reward for a trader looking to enter on a stop entry.
Traders should pay attention to the day’s open, especially if the open is in the middle 1/3^rd of the range.
Lastly, today is Friday, so weekly chart support/resistance is important. It is common to see a surprise breakout late in the day as traders decide on the weekly chart’s close. This means the market gets a surprise breakout late in the day; they must not be in denial.

Emini intraday market update

The Emini rallied, forming a bull trend from the open.
The rally up to bar 18 was strong enough that the first reversal down was likely going to fail and lead to sideways trading.
Although the selloff down to the moving average was strong, it was likely a minor reversal.
The market ended up going sideways until the 11:00 AM PT when it formed a wedge bottom and rallied to a new high of the day around bar 62 (11:40 AM PT).
The bulls want to reach the May 19 high (4,226) , however the target is probably too far away. Next, the bulls want the day to close on its high.
The bears want the market go sideways to down and form a tail going into the close. As of 11:45 AM PT, the market is probably going to go sideways into the close.

Yesterday’s Emini setups

SP500 Emini 5-Min Triangle Open Bull Channel but Close near Open. Bulls will use first reversal to exit longs.

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 near 4-year library of more detailed explanations of swing trade setups (see Online Course/BTC Daily Setups). Encyclopedia members get current daily charts added to Encyclopedia.

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: Buyers At the March 24th Low

The EURUSD went one pip below the March 24^th low before reversing up 40 pips.
The market will probably fall further below the Mach 24^th low. This was the bottom of a prolonged bull channel, so the odds favored buyers in this area.
With the tight channel down from the May high, the odds are that the first reversal up will be minor and lead to sideways trading.
The bulls have a possible parabolic wedge bottom with the May 15^th, May 19^th, and May 25^th lows. This means the market may get a minor reversal up for a few legs. However, it is essential to remember that parabolic wedge bottoms are typically minor reversals that lead to bear flags (trading range or trend resumption down) than successful bull reversals.
The bulls need to create more buying pressure before traders are convinced that the market will reverse up.
The selloff from the May high is a breakout on a higher time frame, which means it will probably have a second leg down after and pullback.
The market will probably pull back for a few legs and get closer to the moving average over the next few days.

Summary of today’s S&P Emini price action

SP500 Emini 5-Min Small Pullback Bull Trend From The Open

Al created the SP500 Emini charts.

End of day video review

Today’s End Of Day review will be presented in the Trading Room and only available to the trading room subscribers.

Brad Wolff will host a live Q&A session tomorrow (5/27) starting at 12:00 PM PT/3:00 PM ET for Subscribers of Trading Room. Subscribers will be able to access the Q&A Session link just like they normally do for the trading room. The Q&A will be recorded.

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.