Emini daily chart
- The S&P 500 Futures formed a triangle and broke above the May 1st high; however, the bears overpowered the bulls, and the market reversed yesterday. The reversal down yesterday is strong enough that market will see likely test of triangle apex and the low of May 17th (bottom of the bull breakout).
- The bulls formed a high 1 buy with Monday’s close. However, it was a high 1 buy at the top of a trading range, which lowers the probability for the bulls.
- The bears had a strong bear breakout yesterday. Next, they want today to have strong follow-through and be another big bear bar closing on its low.
- The bulls will try to prevent the bears from getting another strong bear breakout bar today.
- There are currently trapped bulls who bought the May 22 low. Those bulls are deciding what to do here. They are probably disappointed enough that they will exit on any test of the May 22nd low. This means that there are probably sellers at the May 22nd low.
- Overall, the bulls are trapped, and the bears can get a strong follow-through bar today or tomorrow. If the bears can get a follow-through today or tomorrow, the probability will increase for lower prices. More likely, today will disappoint both the bulls and the bears.
Emini 5-minute chart and what to expect today
- Emini is down 20 points in the overnight Globex session.
- The overnight Globex market sold off after yesterday’s strong bear channel down.
- Today will probably have at least two hours of sideways trading since yesterday’s selloff was climactic. This means traders should expect the open to have a lot of trading range trading.
- Most traders should wait for 6-12 bars unless they are comfortable with limit orders.
- There is a greater than an 80% chance that a swing trade will happen before the end of the second hour. This means that traders should focus on catching the opening swing that often happens after forming a double top/bottom or a wedge top/bottom.
- Traders should expect a trading range day but be open to a possible trend day since the bears will try and get follow-through after yesterday’s bear trend.
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.