Emini daily chart
- The S&P 500 Futures formed a strong bear bar closing on its low yesterday.
- Bears want break below March 22nd high and test of April 26th low with close below the March 22nd high. This would close the breakout point and end the argument of a measured move from the March 13th low to the March 22nd high.
- The next target for the bears is a test of the 4,000 big round number.
- The past two trading days increase the probability of the market going slightly lower, reaching the April 26th low.
- The bulls want the rally (Tuesday’s low to yesterday’s high) to disappoint the bears enough that the market will form a micro double bottom and rally back to the May 1st high.
- There were bulls who bought the May 1st low and scaled in lower during Tuesday’s selloff. Those bulls were disappointed enough that many used the rally late Tuesday to Wednesday’s high to exit their trade breakeven, or with a small profit after their scale in traders. Most of those bulls probably bought more at the April 26th low.
- There were bears who sold the April 26th low and were disappointed by last week’s rally. Most of those bears sold higher and were happy to buy back shorts at the April 26th low.
- The market has been in a tight trading range for over a month and is in breakout mode. While the bears have an argument for a test down below the March 22nd high, they need to get more signs of strength, such as solid bear closes.
- The bears are hopeful that the market is forming a double top (April 18th and May 1st) and will break below the neckline (April 26th) and fall for a measured move down, testing the March 24th low.
Emini 5-minute chart and what to expect today
- Emini is down 20 points in the overnight Globex session.
- The bear have gone sideways for most of the overnight Globex session.
- After the consecutive bear trend bars on the daily chart, the bulls want today to disappoint the bears and form a trading range bar or a bull bar.
- Traders should assume the market will have a trading range open and going sideways for the first couple of hours. This means that most traders should consider not trading for the first 6-12 bars unless they are comfortable with limit orders.
- Most traders should focus on catching the opening swing trade that typically begins before the end of the second hour.
- While the odds favor a trading range, if the market begins to form strong trend bars on the open, traders cannot be in denial and must trade the market like a trade.
- Lastly, traders should pay close attention to yesterday’s low 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.