S&P Emini pre-open market analysisEmini daily chart
- S&P 500 Futures strong bull reversal last Friday, testing the May 19th high. This reversal up is strong enough to increase the odds of a second leg up and a test of the February high.
- The bulls have a chance to get a strong upside breakout. There are bears trapped who sold a pullback from the breakout down to May 24th. Those bears all got trapped by last Friday’s bull breakout.
- Last Friday’s bull breakout was strong enough to get at least a small 2nd leg up.
- The bears that are holding a losing position will probably be more than happy to exit their trade with a smaller loss. This increases the risk of the bulls squeezing the bears out of losing shorts.
- This means traders will pay close attention to the next few days to see if the bears will get squeezed out.
- There will be bears selling up here, trying to trap the bulls and make the market reverse down.
- While the bulls have the potential to get a strong upside breakout, they do not have it yet. This means that the bears have not given up yet.
- However, it would not take much for the remaining bears to get up. The size of last Friday’s breakout alone is a sign of bears buying back shorts. However, as I said earlier, bears will still try and prevent the bulls from getting follow-through.
- Overall, the bulls need to get follow-through buying today, and the bears need to prevent it. Traders will pay close attention to how determined the bulls are to get the upside breakout. If the bulls can get follow-through buying today, more bears will probably exit their longs.
Emini 5-minute chart and what to expect today
- Emini is up 20 points in the overnight Globex session.
- The overnight Globex market rallied and is trying to get above yesterday’s Globex high.
- While traders should assume that today will have a lot of trading range price action, the bulls have decent potential to get a bull trend day. As I mentioned above, the bulls will try their best to get follow-through buying today, and the bears will try and prevent it.
- As I often say, traders should assume the first 6-12 bars will probably go sideways. This means that most traders should not be too eager to trade the opening bars unless they are comfortable with limit order trading.
- The open often has several reversals, and it is easy to take a couple of losses early in the day. Then a trader will spend the rest of the day with the goal to get back to breakeven on the day.
- If a trader is patient, they gain the probability of catching the low/high of the day and will have more certainty of the day.
- Most traders should try and catch the opening swing that often begins after the formation of a double top/bottom or a wedge top/bottom. The opening swing often begins within the first 2 hours of the day.
- Lastly, traders should pay close attention to the day’s open, especially if the day has a lot of trading range price action.
Friday’s Emini setups
Here are several reasonable stop-entry setups from Friday (before US Holiday weekend break). 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.