S&P 500 E-Mini Generated High 1 Buy Signal Yesterday: Should You Go Long?

Emini daily chart

• o    The Emini formed a Hight 1 buy signal bar yesterday, closing near its high. The bulls are hopeful there will buy buyers above yesterday’s High 1 and today will have an upside breakout.
• o    Because the market is getting climactic, there is an increased risk that there may be sellers above yesterday’s high leading to a pullback before the bulls can get trend resumption.
• o    If sellers are above, the pullback will likely be brief and lead to buyers near the bottom of yesterday’s High 1.
• o    The bears need more selling pressure to develop to have any reasonable expectation of getting a reversal.
• o    This means that the bears need to make the market go sideways and accumulate more bear bars if they are going to get a successful reversal.
• o    The market is so close to the September 1^st high that it will probably reach it soon, even if there is a pullback first.
• o    Overall, the daily chart is still Always In Longa, and buyers are likely below on any pullback.
  
  

Emini 5-minute chart and what to expect today

• o    Emini is up 3 points in the overnight Globex session.
• o    The Emini rallied in a weak bull channel for most of the overnight session. The bears recently formed a downside breakout with follow-through on the 15-minute chart.
• o    As mentioned above, yesterday was a High 1 buy signals bar on the daily chart. This means that yesterday’s high will be an important magnet going into today’s open.
• o    As I often say, traders should expect a lot of trading range price action on the open. Most traders should consider not trading the first 6-12 bars unless they are comfortable with wide stops and limit orders.
• o    There is at least an 80% chance of an opening swing trade beginning before the end of the second hour. It is common for the opening swing to occur after the formation of a double top/bottom or a wedge top/bottom. This means a traders can often wait for one of these patterns to form before placing a trade to try and catch the opening swing.
• o    Today is Friday, which means that the weekly chart will be important going into the close of today. Traders should be prepared for a possible surprise breakout late in the day as institutions decide on the close of the weekly chart.
  
  

Yesterday’s Emini setups

Here are reasonable stop entry setups from yesterday. I show each buy entry bar with a green arrow and each sell entry bar with a red arrow. 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.