Trading Update: Tuesday May 23, 2023

S&P Emini pre-open market analysis

Emini daily chart

• The Emini triggered the sell below last Friday’s low and reversed up. Bulls have a high 1 buy signal bar today. However, it closed as a doji, a weak High 1 buy signal bar.
• The Bulls will likely get a second leg up and a test of the February high. However, yesterday’s signal bar increases the probability that the bears will get a small second leg down after last Friday’s bear bar.
• At the moment, the market is Always In Long. This means that traders will buy for a second leg up. The problem the bulls have is that the market is at the top of a trading range. This increases the risk of a possible trap for the bulls.
• The bears must create more selling pressure to convince everyone that last week’s two-bar bull breakout will fail.
• However, if bears manage to get the market to go sideways for a couple of bars and form a 2^nd entry short, that would lower the probability for the bulls.
• Overall, the bears are trapped who sold during the bull breakout last Wednesday and Thursday (May 18^th).  The Bulls have an opportunity to get a strong 2^nd leg up and need to take advantage of it.

Emini 5-minute chart and what to expect today

• Emini is down 16 points in the overnight Globex session.
• The overnight Globex market reached yesterday’s U.S. Session high and sold off, testing and breaking below yesterday’s low.
• The bears want today to close on its low. However, today will likely be a trading range day and disappoint the bulls and the bears.
• The bulls will try and get a bull trend bar closing on its high. If the market closes below yesterday’s high, this will create a High 1 buy signal bar.
• As I often say, traders should expect a lot of trading range price action today and for the market to go sideways for the first 6-12 bars. This means there is no rush to trade on the open because the odds favor sideways trading.
• Most traders should try and catch the opening swing that often begins after the formation of a double top/bottom or a wedge top/bottom. The opening swing will typically begin before the end of the second hour.
• Overall, traders should expect a trading range day. Lastly, traders should pay close attention to the day’s open as it will probably be a magnet for most of the day.

Emini intraday market update

• To follow about midday…

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 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

• The Bulls tried to get a reversal up over the past two days. However, the channel down is tight. This increased the probability or more sideways to down.
• The bears want to get down to the March 24^th low, the bottom of the bull channel that rallied up to the May high.
• If everyone agrees that the market will have to reach it (March 24^th), it could get a sell vacuum test of the support level.
• Bulls want to create support and form a double bottom with the Mach 24^th low. The likelihood the bulls have with the argument of the double bottom is that the bear channel is tight. This increases the probability that the first reversal down will fail.
• Overall, traders should expect more sideways to down and a test of the March 24^th low. The bulls need to create more buying pressure, such as a micro double bottom, if they will get a reversal up.

Summary of today’s S&P Emini price action

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.

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.