E-Mini Bulls Want Second Leg up to May 1st High

Emini daily chart

• The Emini gapped up and rallied last Friday, forming a strong bull trend day.
• The odds are there are buyers not far below and the bulls second leg up will be achieved.
• The May 1st low is a magnet for the bulls. Some bulls bought the May 1st low and scaled in lower. They were disappointed by the three-bar selloff down to May 4th and will likely look to exit around the May 1st low.
• The bulls want the rally up from May 4th to be a double bottom with the April 26th low. Next, they want the market to break above the neckline (May 1st) and rally for a measured move-up.
• The bears see the market in a trading range. They do not mind a test of the May 1st low as long as any breakout of the May 1st low quickly fails and reverses back down.
• Traders will pay close attention to what kind of follow-through the bulls can get today. If the bulls can get a second strong bull trend bar, the odds will increase for higher prices. However, there will likely be something disappointing about the follow-through today, reminding traders that the market is still in a trading range since April.

Emini 5-minute chart and what to expect today

• Emini is up 4 points in the overnight Globex session.
• The Emini has gone sideways for more of the overnight session.
• The bulls want the market to rally today and get follow-through on the daily chart.
• The bears want any upside breakout above yesterday’s high to fail and the market to reverse back down.
• As I often say, most traders should assume that the market will have a lot of trading range price action during the first hour. This means most traders should wait for 6-12 bars before placing a trade unless they are comfortable with limit order trading.
• Most traders should try and catch the opening swing, which will often begin before the end of the second hour. The open swing will often begin after the formation of a double top/bottom or a wedge top/bottom.
• Traders should expect a trading range day and for the bulls to be disappointed; however, they should be open to anything. This means that if the market starts to form a trend from the open, traders cannot deny the possibility of the day becoming another bull trend day.

Friday’s Emini setups

SP500-Emini 5-Min Chart

Here are several reasonable stop-entry setups from Friday. 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.