Emini daily chart
- The S&P 500 Futures gapped up on the open and sold off for the first 40 bars before getting a rally into the close. This formed a bear doji bar on the daily chart.
- The daily chart is in a tight trading range in breakout mode. This means traders should assume that the probability is close to 50% for both the bulls and the bears. Emini likely to continue sideways.
- The Bulls got a second leg up following last Friday’s (May 5th) bull breakout.
- Bears sold the May 5th high and scaled in higher. They are trapped and trying to exit back at the May 5th high.
- There are trapped bulls that bought the May 1st low and scaled in lower. They are also trapped and will likely sell out of longs back at the May 1st low.
- Overall, traders should assume the market is neutral and in breakout mode. This means the probability is close to 50% for both the bulls and the bears. Until a clear breakout with follow-through, traders should assume that the market will continue to go sideways.
Emini 5-minute chart and what to expect today
- Emini is down 15 points in the overnight Globex session.
- The Globex market rallied back to the highs of yesterday’s open, where it found resistance and sold off. There were trapped bulls who used the Globex rally late last night to sell out of longs.
- The bears got a downside breakout during the early morning hours, and now the market is back to the middle of a trading range that began on May 7th.
- The U.S. Session open will probably open near yesterday’s close.
- Traders should assume that the first 6-12 bars will likely go sideways. This means most traders should wait for at least 6 bars unless they are comfortable with limit order trading.
- Most traders should try and catch the opening swing that typically begins before the end of the second hour after forming a double top/bottom or wedge top/bottom.
- Lastly, because of the daily chart, traders should assume that the day session will have a lot of trading range trading.
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.