Emini daily chart
- Yesterday was a follow-through bar, and the S&P 500 Futures reached the bear trendline (blue line). Emini risk getting big for bulls.
- The momentum from the March 24th low is strong enough to increase the odds of a second leg up after any pullback.
- Traders should expect the market to pull back soon for a day or two. The risk is getting big for the bulls. Therefore, traders will likely begin to take partial profits.
- The bulls want a breakout far above the February 2nd high and rally to the August 16th high.
- The bears want the rally to stall around the February high and form a double top.
- the market will probably pull back soon as bulls take partial profits.
- Traders will pay close attention to see how deep the pullback will be.
- Traders will also pay close attention to the test of the February 2nd high. If the market starts to stall and go sideways under February 2023 high, that will increase risk of the rally being a buy vacuum test of resistance (February 2023). If the market breaks beyond February 2023 high and starts to go sideways above it, that will increase the odds of higher prices.
- Strong bull trends generally break out beyond resistance and stall after the breakout. Legs within trading ranges will get close to the resistance level and start to go sideways just under it.
- Overall, it will be important to see what kind of pullback the Bulls get. Bears need to do more and demonstrate strength before they will be able to develop a credible swing short. One way they could do that is to make the market go sideways and form a lower high with the February 2nd high.
Emini 5-minute chart and what to expect today
- Emini is up 6 points in the overnight Globex session.
- The Globex market rallied in the early morning hours after going sideways for several bars last night.
- Traders should assume that today will have a lot of trading range price action. This means traders should pay close attention to the open of the day, as it will likely be an important magnet today.
- The bulls will probably not get another bull trend day today, so if there is an early morning rally, traders will look to sell the rally similar to yesterday.
- As always, most trades should wait for 6-12 bars before placing a trade unless they are comfortable with limit orders.
- Most traders should try and catch the opening swing trade that usually forms a double top/bottom or a wedge top/bottom. The swing trade typically begins before the end of the second hour.
- Overall, traders should assume that the bulls will probably be disappointed today, which means the market will probably get a close below the open or a weak bull bar.
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.