E-Mini Breaks Above February High

Emini daily chart

• S&P 500 Futures breaking above February high The bulls got a strong entry bar following the H1 buy setup on Wednesday. They want a second leg up following last Friday’s strong bull trend. They are hopeful that today will form a strong follow-through bar on the daily chart to close above the February high.
• The bears will try their best to disappoint the bulls. They want to form a bear bar and close below the May high.
• The bulls have a chance to get a successful breakout of the year-long trading range. However, in order to convince traders that the bulls have won, they will, at a minimum, need two strong consecutive bull trend bars closing above their midpoints.
• While the odds are the bulls will be disappointed today, the market is at important resistance (February high). This means that traders must be prepared for a possible successful breakout.
• If it becomes clear that the market is getting a successful upside breakout, the market could race up quickly to the August high.
• It was reasonable to buy the August high. The bulls that took the buy got trapped on the selloff down to October 2022. When you take a reasonable trade, use a wide stop, and scale in, there typically an 60% chance the market will retest your entry price. This means there is at least a 60% chance the market will test the August high to allow the trapped bulls out.
• It is worth mentioning that there is an 80% chance that the market will allow these scale-in traders out break even, which has already happened.
• Lastly, the bulls have a potential measuring move projection from the bull breakout of the bear flag (March 13th low to the March 22nd high), projecting up to the 4,300. The market tried to close the breakout point gap (March 22nd high) during the April 26th Low and May 4th Low.

Emini 5-minute chart and what to expect today

• Emini is up 20 points in the overnight Globex session.
• The overnight Globex session rallied following a sideways pullback after yesterday’s strong bull trend.
• The market released the 5:30 AM PT report to give a lot of trading range price action.
• Since yesterday was a strong bull trend, the market will probably have at least 2 hours of sideways trading. It is possible that the sideways trading began with yesterday’s late selloff, which means the market may not need to go sideways for two hours on the open.
• As I often say, traders should expect the open to have much sideways trading. This means that most traders should consider waiting for 6-12 bars unless they are comfortable making quick decisions and trading with limit orders.
• Most traders should try and catch the opening swing, which often begins before the end of the second hour after the formation of a double top/bottom or a wedge top/bottom.
• Today is Friday, which means the weekly chart is important. Traders should be mindful of the week’s open, about 20 points away from the current price. Traders should also be prepared for a potential surprise breakout late in the day as traders decide on the close of the weekly chart.
• Lastly, traders should be prepared for anything today, and they must not be in denial of the price action. The bulls want follow-through buying after yesterday, and the bears want to prevent the follow-through (See daily chart summary for more information).

Yesterday’s Emini setups

SP500-Emini-5-Min Chart

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.