Emini daily chart- S&P 500 Futures Emini Bulls Trying for 2nd Leg Up as bears failed to get a decent entry bar after Monday’s bears close. This is another reminder that the market is in a trading range on the daily chart.
- The bulls want yesterday to be a pullback from the March 24th buy signal bar.
- The most important thing to realize on the daily chart is that the market is in breakout mode. This means that stop entries are all low-probability trades. Traders should expect the breakout up or down to be 50%.
- Eventually, the market will get a successful breakout with follow-through; however, until then, most traders should wait.
- When the market is in breakout mode, making money can be difficult, even with limit orders. The probability is too close to 50%, making it hard for traders to gain an edge.
- Also, the longer the market goes sideways, the greater the probability of a breakout soon, which will trap limit order traders betting on failed breakouts.
- Overall, the market is above the 4,000 big round number, and deciding if the market will rally 100 points or sell off 100 points.
Emini 5-minute chart and what to expect today
- The Emini is up 40 points in the overnight Globex market.
- The Globex market rallied for most of the overnight session. On the 60-minute chart, it is clear that last night’s rally is a 2nd leg up from last Friday’s rally.
- The bulls want the market to gap up and form a strong bull trend day.
- More likely, today will be another trading range day. Traders should be open to a possible opening reversal after a brief rally. The logic is the same as a trader who buys above a bar and scalps out for two points. If traders suspect the market is in a trading range, they will quickly exit after a scalping profit. This means that there is added risk that the market may gap up, form a brief rally, and enter a trading range.
- Overall, as I often say, most traders should expect a trading range day and for the market to go mostly sideways.
- Most traders should wait for a swing trade to develop and avoid trading the first 6-12 bars.
- A credible swing trade will often form after a double top/bottom or a wedge top/bottom. This means that most swing traders on the open take at least 6-12 bars to form, so there is really no rush to trade on the open.
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.