S&P Emini Pre-Open Market Analysis- The S&P 500 Emini has rallied for two legs and is testing the moving average, which is important resistance above.
- Last Thursday, an outside up bar was formed, and the bulls tried to close above it last Friday. However, the bulls were unable to do so due to the resistance above.
- The bears want to form a reversal bar today or tomorrow, closing on its low. This would be a second entry short at the moving average.
- The daily chart is in a trading range, and the probability of a breakout up or down is closer to 50%.
- The bears expect a second leg down of the April selloff. However, the reversal up over the past five trading days is enough to make the market a trading range. This increases the probability that there are buyers below, near the 5,000 round number and the April 25th low.
- Traders will pay close attention to see what kind of signal bar the bears can get for the second entry short at the moving average.
- If today is a bear bar closing on its low, there is an added risk of a test of 5,000 and the April low.
- The bulls want to prevent the bears from getting a bear reversal bar closing on its low. They are hopeful that the next day or two will get an upside breakout above the moving average.
- Next, they would want a measured move-up for the bear flag from the April 19th low to the April 25th high, projecting up.
- Overall, traders will pay close attention to how determined the bears are to get a reversal bar.
What to Expect Today
- The Emini has been in a trading range for most of the overnight session.
- The market will probably test above last week’s high (5,146.5) and trigger the buy signal bar on the weekly chart.
- There will probably be sellers above, and the market will pull back briefly. If this happens, the bull may try to break above the Lask week’s high later today.
- Traders should assume that today, there will be a lot of trading range price action on the open. This means traders should be patient and not rush to trade.
- Most traders should wait 6-12 bar before placing a trade unless they can make quick decisions.
- The Globex range is small (around 13 points); this increases the odds that the U.S. Session will expand the range, meaning there is potential for a breakout on the open.
- Tomorrow is the final trading day of the month. The bears want April to close below the March low (5,126.5), which would end the 6-bar bull micro channel on the monthly. This price level will likely be a magnet for the next two days.
- There is an 80% chance of a trading range open and only a 20% chance of a trend from the open. This means the market will likely be for a double top/bottom or a wedge top/bottom on the open, creating a trading range.
- Most opens have an opening swing.
- Because of what I said above regarding the Globex range being small, traders should look for an opening swing to double the range of the Globex market. This means there is potential for a swing trader to last two legs and two hours, beginning before the end of the second hour.
- Lastly, being patient is the most important thing on the open. If one is confused regarding how to trade the market in front of them, they are best stepping aside until they are equipped to trade the current market conditions.
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.