S&P Emini pre-open market analysis
Emini daily chart
- The S&P 500 Futures bulls have two bar breakout on June 2nd that is testing 4,300. Bears hopeful this rally is a buy vacuum test of resistance, the 4,300 big round number.
- While it is possibly a buy vacuum, it is a bull breakout above almost 200 days. This is enough of a surprise, that the recent breakout will probably get a 2nd leg up.
- The bears want to trap the bulls into buying high in a large trading range since August of last year. However, the bears will need to develop more selling pressure if they are going to trap the bulls. At a minimum, the bears will need a micro double top.
- The August high is a likely magnet above, and the market will probably have to test closer to it. The bulls bought the August 2023 rally, and they got trapped by the endless pullback down to the October 2022 low.
- The bulls who bought the August 2022 rally took a reasonable trade; this means that if they used a wide stop and scale in lower, they have a 60% chance of being able to exit back at their original entry price. This means there is a 60% chance or higher that the market will have to test closer to the August 2022 high.
- It is possible that the market falls below the October 2022 low before it reaches the August 2022 high. However, at the moment, the market will probably test the August 2022 high first.
Emini 5-minute chart and what to expect today
- Emini is down 3 points in the overnight Globex session.
- The overnight Globex market has been in a tight trading range since yesterday’s U.S. Session close.
- Today will probably have a lot of trading range price action.
- The bulls want the day to close on its high and form a strong H1 buy setup on the daily chart.
- The bears want to form a strong entry bar following yesterday’s bear reversal bar.
- As I often say, traders should assume that the first 6-12 bars will have a lot of trading range price action. This means that most traders should consider not trading during this time unless they are comfortable with limit orders.
- Most traders should try and catch the opening swing that often begins before the end of the second hour. It is common to get a swing trade after forming a double top/bottom or a wedge top/bottom.
- Lastly, since the day will probably have a lot of trading range price action, traders should pay close attention to the day’s open, as it will likely be a magnet for most of the day.
Yesterday’s Emini setups
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.