Emini daily chart
- The S&P 500 Futures rallied yesterday, testing Wednesday’s high. The moving average is getting closer to the current price.
- This increases the odds that the market will have difficulty going much higher, without reaching the moving average first.
- The market will probably reach the moving average over the next few days.
- The November rally has been strong, and the market is Always In Long. However, traders must remember that the daily chart is in a large trading range. This increases the risk of a deeper pullback than what the bulls want. One possible target is the October 17th breakout point high.
- If the bears take control, they will first need to get a successful breakout below the moving average. Until then, traders will assume buyers will be at the moving average.
Emini 5-minute chart and what to expect today
- Emini is down 7 points in the overnight Globex session.
- The Emini formed a large doji bar during the Unemployment report at 8:30 AM EST. This increases the odds of a trading range open during the U.S. Session.
- Traders should be cautious on the open and consider waiting for 6-12 bars unless they are quick to make decisions. Most of the time, the open will have a lot of two-sided trading, which increases the risk of getting trapped on a failed breakout.
- By waiting for 6-12 bars, a trader gains certainty on the day’s structure and will have a higher probability of catching the high or low of the day.
- Most traders should look for a swing trade on the open. It is common for the opening swing to begin before the end of the second hour, following a double top/bottom, or a wedge top/bottom.
Yesterday’s Emini setups
Here are reasonable stop entry setups from yesterday. I show each buy entry bar with a green arrow and each sell entry bar with a red arrow. 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.