E-Mini Oscillating Around 4,150 in Tight Trading Range

S&P Emini pre-open market analysis

Emini daily chart

• The S&P 500 Futures Daily Chart closed as a small doji bar last Friday. Price is testing the midpoint of the nine-day tight bear channel that began on April 5th.
• Emini oscillating around 4,150 for most of April. Traders see this price level as a fair price.
• The bulls want last Friday’s pullback to lead to a double bottom and a test of the February 2nd high.
• The bears want the opposite. They want the bulls to give up and for the market to test the March 22nd high and ultimately a test down to the March 13th low.
• The market is Always In Long, so the probability slightly favors the bulls. However, if the bulls had a significant probability advantage over the bears, the daily chart would not be in a tight trading range since April.
• Most traders should wait for a clear breakout with follow-through and then decide if the breakout will succeed or fail.
• It is important to realize that the daily chart is close to neutral probability. When a market is in a tight trading range, traders view that range as a fair price. The midpoint of the April range is around 4,150.
• It is common for tight trading ranges to form in the middle of two important magnets. The April range oscillates around 4,150, and there are two important magnets 150 points above and below.
• These magnets are the 4,000 big round number and 4,300. The 4,000 round number has been significant for over a year, which means the market sees that price level as fair. The 4,300 round number is from the March 13th low to the March 22nd measured move projection.
• This means that the market is deciding if it is going to rally 150 points higher and test 4,300 or if the market is going back to the 4,000 big round number. As I said above, traders should assume the probability is nearly 50%.

Emini 5-minute chart and what to expect today

• Emini is up 1 point1 in the overnight Globex session.
• The Globex market sold off during the overnight session and formed a reversal during the early morning hours.
• The reversal up is strong enough to likely get a second leg up and increase the odds of today forming a bull trend or a trading range during the U.S. Session.
• As I often say, traders should assume the open will have a lot of trading range price action. This means that most traders should consider waiting for 6-12 bars before placing a trade.
• The first hour often has a lot of failed breakouts, and by waiting for the first 6 bars, a trader gains certainty on the type of day.
• Most traders should try and catch the opening swing trade that typically begins before the end of the second hour.
• It is common for the opening swing trade to begin after forming a double top/bottom or a wedge top/bottom.
• Overall, traders should assume a trading range is likely until they are proven otherwise.
• Trader should be open to a possible bull trend day due to the daily chart. However, if today is going to be a bull trend, there will be plenty of time to buy after the market has formed a strong breakout with follow-through, so there is no rush.

Friday’s Emini 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 Emini.