As 2025 comes to a close, traders are already preparing for the markets to reopen in the new year. One period deserves special attention: the first trading week of January. Time and again, history shows that this week brings heightened volatility, wide price swings, and strong intraday trends.

Understanding this pattern can help traders approach January 2026 with clearer expectations and better discipline.

Why Volatility Spikes at the Start of the Year

The opening days of January are marked by a surge in participation. Institutional money returns, portfolios are rebalanced, and traders begin positioning for the year ahead. The result is larger-than-normal trading ranges across major indexes.

Markets such as the E-mini S&P 500, Nasdaq, Dow, and micro contracts frequently post daily ranges of 80 to 100 points or more, creating fast-moving sessions with real opportunity for active traders.

Big Swings Up and Down Are Normal

High volatility does not mean one clear direction for the week.

Looking back at the first trading weeks from 2020 through 2025, markets often alternate between bullish and bearish sessions. One day may rally strongly, only to reverse sharply the next. These back-and-forth moves are a defining feature of early January.

For traders, the message is clear: don’t lock into a bias. The market often changes direction from one session to the next.

Intraday Trends Are Where the Opportunity Lies

While the overall week may swing, individual sessions often trend clearly once momentum takes hold.

When price begins to move decisively—higher or lower—it frequently continues in that direction for most of the day. This pattern has repeated across multiple years, making the first week of January especially attractive for day traders who follow price action.

This environment favors:

• Trading with the intraday trend
• Taking multiple setups once momentum is confirmed
• Letting price, not prediction, guide decisions

React to Price Action—Don’t Predict

The biggest mistake traders make during the first week of the year is trying to forecast the market’s direction.

January’s volatility quickly reveals momentum. Traders who wait for confirmation and react accordingly are often rewarded, while those who cling to early assumptions get caught on the wrong side of fast moves.

Strong risk management is essential, as wide ranges can amplify both gains and losses.

How to Approach the First Week of January 2026

As the new year begins, keep these principles in mind:

• Expect expanded daily ranges
• Prepare for both bullish and bearish sessions
• Avoid assuming follow-through from one day to the next
• Trade with momentum once a trend is established
• Manage risk carefully in volatile conditions

Final Takeaway

The first trading week of 2026 is likely to deliver fast markets, large price swings, and clear intraday trends. While direction may shift from day to day, traders who stay flexible and follow price action can find high-quality opportunities.

Start the year focused, disciplined, and ready to react—not predict.