Emini daily chart
- The S&P 500 Futures continues to go sideways following last Thursdays outside down bar. On the Globex Market, the Bears are testing the July 28th Low.
- I have been saying for the past couple of blogs that the odds favor a test of the moving average (blue line). While the bulls have done a good job of forming a tight channel, the momentum to the upside is losing energy.
- Traders are happy to buy far above the moving average if the momentum justifies paying a higher premium. However, the bulls have lost momentum, so traders will be less willing to buy far above the moving average.
- The bears are hopeful that they can get a strong downside breakout; however, more likely, the best the bears will be able to achieve is a trading range.
- Overall, traders should expect the market to reach the moving average today or in the next few days.
Emini 5-minute chart and what to expect today
- Emini is down 33 points in the overnight Globex session.
- The Globex market recently sold off below last Thursday’s low (July 27th), the minimum expectation for the bears.
- The market will probably form a trading range around last Thursday’s low, and buyers will probably be around the low.
- Today will probably have a lot of trading range price action. This means most traders should assume that the open will be a limit order market until proven otherwise.
- Most traders should wait for 6-12 bars before placing a trade. By being patient on the open, a trader will gain certainty about the day’s structure and have higher confidence in what type of day is forming.
- There is at least an 80% chance that the market will form an opening swing before the end of the second hour. It is common for the opening swing to begin after the formation of a double top/bottom or a wedge top/bottom.
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.