Tuesday's price action predicted today's open

January 20, 2016 09:40 AM

The S&P500 E-mini’s dominant price action feature on Tuesday was a broad bear channel.

Tuesday, Jan. 19, 2016

  • Bar 1 - Gap up, but fail, failure breakout top of bull channel, high of yesterday, and 60 minute 20 bar exponential moving average, always in short, but tail so probably limited down
  • Bar 2 - Big bear follow through, more down, maybe to high of yesterday
  • Bar 5 - Opening reversal just above moving average, possible low of the day, but 5 bar trend from the first bar bear, small body, not quite to moving average, low probability buy, probably sellers above, and sideways more likely than up. Trading range likely so should get at least 50% pullback
  • Bar 7 - Weak bounce, sellers above or probably sellers at the high of the bar scaling in higher
  • Bar 8 - Bear flag but small body, big tails buy below or probably buyers at the low of the bar scaling in lower
  • Bar 10 - 6 bars up but no gap yet so trading range likely, but possible low of the day
  • Bar 12 - Gap, close above 11, tight channel, but weak rally. Possible measuring gap, but pullback more likely. Always in long, but might get deep pullback since weak rally, if get new high of the day, might rally for mmu from low of the day to open of day, and then test back down to open of day at end of day to create doji day
  • Bar 13 - Double top lower high 1 at 60 minute 20 bar exponential moving average, two legged pullback in a bear move 8, ok sell or short for high of the day, but tight channel, always in long, low probability so swing only or wait sell or short. Limit order market, sellers scaling in above, buyers below, both scalping, might get deep pullback since trading range
  • Bar 14 - Bear breakout, big bar, more down
  • Bar 16 - Breakout pullback buy or long but sellers above or probably sellers at the high of the bar scaling in higher, maybe to bottom of channel
  • Bar 18 - Two legged pullback in a bull move but 2 big bear bars, sellers above or probably sellers at the high of the bar scaling in higher. Trading range day


About the Author

Al Brooks, M.D., is author of the Brooks Trading Course (27 hours of videos at BrooksTradingCourse.com), several books on Price action (Reading Price Charts Bar by Bar: The Technical Analysis of Price Action for the Serious Trader, Wiley, 2009, and the 500,000 word, three-book series, Trading Price Action, Wiley, 2012), and numerous articles in Futures Magazine. He also provides live intraday E-mini price action analysis and free end-of-day analysis on www.brookspriceaction.com.