S&P 500 E-Mini Likely in Breakout Mode

S&P Emini pre-open market analysis

Emini daily chart

• The S&P 500 Futures daily chart is forming a contracting trading range, which is likely a breakout mode pattern. This is a warning that the bulls are bears becoming balanced and neutral.
• The market is between two important price levels, the June 26th low and the June 16th high.
• The market is Always In Long and holding above the moving average, the market. However, the market would not be begging to go sideways if the bulls had a big advantage.
• Breakout mode is a type of trading range, which means most breakouts fail and reverse. This means traders should use caution and expect sideways price action until there is a strong breakout with follow-through.
• The bulls have done well over the past couple of weeks, preventing strong bear bars. This is a sign that the bulls have slightly more control over the market than the bears.
• Overall, traders should expect sideways trading and lots of disappointment for both the bulls and the bears.

Emini 5-minute chart and what to expect today

• Emini is down 9 points in the overnight Globex session.
• The Overnight Globex Market formed a bear channel during last night’s session and had a rally during the early morning hours.
• The rally up over the past 5 hours is strong, and the odds are the market will get a second leg up.
• The downside is probably limited over the next couple of hours. This means the open will probably be a trading range or a bull trend and, less likely, a bear trend.
• If there is a selloff on the open, it will probably be limited and lead to a trading range.
• As I often say, traders should expect a lot of sideways trading on the open. Most traders should consider not trading for the first 6-12 bars since the open often forms a trading range.
• Most traders should focus on catching the opening swing that often begins before the end of the second hour. There is an 80% chance that the open will form a double top/bottom or a wedge top/bottom. A trader can likely wait for one of these patterns to form and have a reasonable chance of catching a swing.
• Overall, traders should assume that a trading range is likely until there is a clear breakout with follow-through.

Friday’s Emini setups

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.