E-mini daily chart
- The E-mini S&P 500 futures formed a bear bar on Friday after last Thursday’s (March 16th) bull breakout.
- The bears want Friday (March 17th) to set up a Low 2 short, leading to a downside breakout below the March low.
- With last Thursday’s breakout bar being so big, there are more likely buyers below Friday’s low (Low 2).
- The daily chart is in a trading range at credible support, the December 2022 area. The bulls want a high-low double bottom (December 22nd and March 13th)
- It is common to get bull breakouts of bear flags at the bottom of trading ranges. The opposite goes for the tops of trading ranges (bear breakouts of bull flags).
- Since the bears have a reasonable Low 2 near support, traders should be prepared for a bull breakout above Friday’s high late in a February selloff.
- This means that the market may get a measured move from the March 13th low to the March 16th high, which projects up to around 4,150.
- Trades will pay close attention today since it will likely be the entry bar for last Friday’s Low 2 short. If the bear gets a strong follow-through bar, more traders will sell, betting on lower prices. If today is a strong bull reversal bar, the bears may exit early, anticipating the market going above the March 16th high.
E-mini 5-minute chart and what to expect today
- E-mini is up 10 points in the overnight Globex session.
- The Globex had a downside breakout during the overnight hours and reversed up recently.
- Traders should be open to the possibility of a bull trend day (see daily chart above, bad Low 2). However, the day will likely have a lot of trading range price action.
- As always, traders should expect open and sideways trading range for the first 6-12 bars.
- Most traders should focus on trying to catch the opening swing trade that usually begins before the end of the second hour.
- It is common for the opening swing to begin after a double top/bottom or a wedge top/bottom.
- Lastly, traders can wait for a credible breakout with follow-through and enter in the direction of the breakout, betting on a 2nd leg.
Friday’s E-mini 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 E-mini.