Emini daily chart
- The S&P 500 Futures bears formed a Low 1 short yesterday, following a brief two-bar pullback.
- The bears hope they will get trend resumption today, and the market will find sellers below yesterday’s low.
- The bulls will see the recent two-day rally as strong enough for a second leg up. Therefore, they expect buyers below yesterday’s low and for the Low 1 to lead to a more complex pullback, such as a Low 2 (second entry short).
- While the rally over the past couple of trading days is disappointing for the bulls, it is not enough to end the argument of a bear trend.
- The bears still have the argument of last week’s breakout below the bear flag (July 27th to August 11th), leading to a measured move down to the February 2nd high.
- Today, traders will pay attention to what kind of entry bar the bears will get. The bears hope they will be strong enough to find sellers below yesterday’s low.
- The bulls want the exact opposite. They hope there are more buyers below yesterday’s low and the market gets a second leg up after the rally that began last Friday.
Emini 5-minute chart and what to expect today
- Emini is up 10 points in the overnight Globex session.
- The Globex market rallied for most of the early morning hours. However, it formed a lower high with yesterday’s selloff and recently formed a second leg down.
- The 60-minute Globex chart is forming a trading range and will probably go sideways for several hours.
- Traders should expect a lot of trading range price action during the open of the U.S. Session. This means that most traders should consider being patient on the open and not being in a rush to trade.
- Most traders should consider waiting 6-12 bars before placing a trading unless they are comfortable with limit order trading.
- If today is going to lead to a strong trend day, there will be plenty of time to enter the trend’s direction. A trend must last for several bars, allowing a trader plenty of time to join the trend’s direction.
- The best thing a trader can do on the open is be patient.
- It is easy for a trader to overtrade on the open and take 1-2 big losses, causing the trader to spend the rest of the day trying to get back to breakeven. The range is often big on the open and contracts as the day progresses, making it even more challenging to get back to breakeven.
- Lastly, traders should pay close attention to the day’s open and yesterday’s low. The bulls expect buyers below yesterday’s low. The bears hope today will lead to a strong entry bar below yesterday’s low.
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.