S&P Emini Pre-Open Market Analysis
- The S&P 500 Emini formed another bull bar yesterday but failed to close above Wednesday’s high. This is a sign that the Bulls are getting weaker and that the market will probably go sideways to down. The Bears are hopeful that they can get a reversal bar today, closing on its low.
- The bulls are losing momentum far above the moving average. This increases the odds that the market will reach the moving average soon.
- Today will probably disappoint the bulls and close as a bear bar.
- The bears are hopeful that they will be able to form a strong reversal down today, which will lead to a test of the moving average.
- The Juen rally is tight, meaning the odds favor a trading range, not a bear trend.
- The bears have halted the buying, which is good; however, they need to do more. Ideally, the bears need consecutive bear bars closing on their lows. That would increase the odds of a second leg down.
- Since the market is far from the moving average, there will probably be a buyer on the test of it.
- Overall, the daily chart will probably continue to go sideways and eventually test down to the March high and the May 31st low. However, this could take several months to happen.
What to Expect Today
- Emini is up 12 points in the overnight Globex session.
- The Globex market has been in a tight bull channel (15-minute chart) for most of the session.
- The bears recently formed a downside breakout during the 8:30 AM EST report.
- The bears will see the 15-minute Globex chart as a bull channel that should evolve into a trading range. This means the odds favor the bear breakout, getting the second leg down.
- The bears are hopeful that today will form a strong bear trend day, leading to a bear reversal bar on the daily chart.
- The bulls want to prevent today from becoming a bear-trend day.
- While the bears have a chance of a bear trend during the U.S. Session, the odds favor a trading range open.
- This means traders should be prepared for the market to go sideways on the open. There is only a 20% chance of a trend from the open and an 80% chance of a trading range open.
- Most traders should wait for 6-12 bars before placing a trade. This will increase their odds of catching either the high or low of the day. It will also reduce the risk of a trader getting trapped in a failed breakout.
- It is common for the opening range to expand and then contract during the middle of the range. This increase in volatility on the open can cause traders to face a big loss on the open. If the range contracts during the middle of the day, it can make it difficult to make the loss up.
- Today is Friday, so weekly support and resistance are important. Traders should be prepared for a possible surprise breakout late in the day as traders decide to close the weekly chart.
- The midpoint of the week is 5,534.25, which is a magnet for the market to try and test today.
- Overall, traders should be patient on the open and wait for clarity. It is common or the open to have several reversals before a successful swing trade begins.
Yesterday’s Emini Setups
Here are reasonable stop-entry setups from yesterday. I show each buy entry bar with a green arrow and each sell entry bar with a red arrow. 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.