Emini daily chart
- The S&P 500 Futures bulls got an upside breakout of the tight trading range, a triangle. However, the market has not broken out of the trading range that began over a month ago.
- The bulls closed above the past 10 bars, which is a sign of strength, but they need to get follow-through buying today or tomorrow.
- The bears will see yesterday as an opportunity to disappoint hopeful bulls betting on a breakout.
- At the moment, it looks like the market will not get an upside breakout.
- Since the market is in a trading range, there is an increased risk of the bulls getting a failed breakout.
- Traders will pay close attention to today’s price action to see if the bulls can get follow-through buying.
- The market is in a triangle which is a breakout mode pattern, and bears are trapped. If the bears begin to give up and buy back shorts, the bulls will buy aggressively, which could cause a strong upside breakout above the February 2nd high.
- The most important thing to realize is that the market is still in a trading range, and yesterday might become a failed breakout, trapping bulls into buying high in a trading range. This means that the bears have an opportunity to get a strong bear reversal bar today.
Emini 5-minute chart and what to expect today
- Emini is down 2 points in the overnight Globex session.
- The Globex market went sideways during the overnight hours and got an upside breakout above yesterday’s high early this morning.
- The bulls want today to have follow-through buying in the form of a strong bull trend during the U.S. Session.
- The bears want the opposite.
- Traders must be open to anything today. The bulls have a reasonable chance of getting strong follow-through and a bull trend day. This means traders cannot be in denial if the open starts to form strong bull trend bars.
- Because of the strong buying yesterday, the open will probably have a lot of sideways trading.
- Traders must be aware that the bears will try their best to prevent the bulls from getting follow-through buying today. This means that the bears, at a minimum, want the market to close below the day’s open.
- As I often say, traders should expect the open to have a lot of limit order trading for the first 6-12 bars. This means traders should consider stepping aside for at least 6 bars on the open.
- While the market may form a trend from the open, it will probably not. Also, even if it forms a trend from the open, there is a 50% chance the initial move will completely reverse. There is an 80% chance that the initial move will get at least a minor pullback.
- Overall, traders must be open to anything and not be in denial of the price action. As Al often says: “Price is Truth,” meaning that a trader cannot deny what the chart is telling them.
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.