E-Mini Trading Range Likely for Several Weeks

S&P Emini pre-open market analysis

Emini daily chart

• The S&P 500 Futures gapped down yesterday, closing the gap from June 29th. This was a reminder that the market is in a trading range, which is likely to continue for several weeks.
• As I have mentioned in a prior blog post, it was reasonable for the bears to sell above June 26, betting on a second leg down. Although the context was not great since it forced bears to sell at the moving average, which is not ideal, it was a reasonable trade.
• Since it was reasonable for the bears to sell betting on a second leg down following the June 16th selloff, the odds were that the bears who scaled in higher would be able to avoid a loss. This is what happened yesterday.
• The bulls knew that the bears were likely disappointed and would be willing to buy the first reversal down.
• the daily chart is in a trading range. This means traders should expect disappointment for both the bulls and the bears.
• Overall, the daily chart will probably be sideways for the next couple of weeks as traders decide on the direction of the breakout.

Emini 5-minute chart and what to expect today

• Emini is down 8 points in the overnight Globex session.
• The 5:30 AM PT report was just released, and the market formed several overlapping bars. This is a warning that the open may have a lot of trading range price action.
• On the 60 Minute chart, the bulls want a large second leg following yesterday’s strong reversal.
• Traders should be open to a bull rally on the open.
• As always, traders should expect a trading range open and for the market to disappoint traders. This means most traders should be cautious about trading the open and wait for clarity.
• Most traders should consider waiting for 6-12 bars before placing a trade.
• Since today is Friday, weekly support and resistance is important. Traders should be aware of the risk of a surprise breakout late in the day as traders decide on the weekly chart’s close.

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.