Emini daily chart
- o The S&P 500 Futures has formed a wedge top over the past 12 trading days at the September 1st magnet. This will increase the odds of two legs going sideways to down and at the test of the 20-period moving average.
- o Although the channel up is tight, some bulls will exit below yesterday’s bear reversal bar and wait for another buy signal bar before entering again.
- o The longer the market goes sideways at this price level, the less traders will want to buy far away from the moving average.
- o The bears are hopeful that the test of the moving average will lead to a strong downside breakout causing the bulls not to be eager to buy the pullback.
- o The bulls want to prevent the bears from forming a strong entry bar. Even if today is a weak bear entry bar, it will probably lead to a bad High 1 buy signal bar with sellers above.
Emini 5-minute chart and what to expect today
- o Emini is up 3 points in the overnight Globex session.
- o The Emini rallied during the early morning Globex hours and reversed down after testing yesterday’s 1:15 PM EST lower high.
- o The bears want the market to form a double-top bear flag and test down to yesterday’s low. Next, the bears want a measured move down of the range mentioned above. The market will likely continue to go sideways and disappoint swing traders.
- o Traders should assume that today will have a lot of trading range price action on the open. This means most traders should consider waiting for 6 – 12 bars before placing a trade unless they are comfortable with limit order trading and making quick decisions.
- o Most traders should look to catch the opening swing trade. There is at least an 80% chance of an opening swing trade that often begins before the end of the second hour after forming a double top/bottom or a wedge top/bottom.
- o Traders should pay attention to the open of the day, as well as yesterday’s low. Traders will try and get follow-through selling and a close below yesterday’s low.
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.