S&P 500 E-Mini Bears Want Close Below June 30 High

S&P Emini pre-open market analysis

Emini daily chart

• The S&P 500 Futures bears are testing the June 30th high and trying to close the gap. The bulls want the opposite and to keep the gap open.
• The odds are the gap will close, and the bears will get a close below the June 30th high.
• The bears’ next target is the gap above July 11th. A gap between two closes is a sigh of momentum and strength. The bears want to fill the gap and close below the July 11th high.
• Last Friday (8/4), the Emini formed a strong outside down bar, closing below last Thursday’s low.
• The bears hope they can continue to get follow-through selling after last Friday’s close. However, the bears will probably be disappointed today or tomorrow. This means traders should expect sideways trading for a day or two.
• The selloff to the August 4th low is probably strong enough to get a second leg down. This means that the odds are that any rally will lead to a lower high.
• However, the market may have to bounce before the bears reach the July 11th high.
• If the bulls get a reversal up, they must show signs of increased buying pressure. Until then, the odds favor more sideways to down.

Emini 5-minute chart and what to expect today

• Emini is up 14 points in the overnight Globex session.
• The overnight Globex market has had much sideways trading.
• The bulls want to disappoint the bears following last Friday’s outside down bar. This means that today has the potential to form an early low of the day or possibly a bull trend from the open.
• More likely, traders should expect sideways trading on the open for at least the first hour.
• Most traders should consider not trading for the first 6-12 bars. By waiting for 6-12 bars, a trader gains certainty on the day structure and avoids getting trapped on the open.
• It is common to get large breakout bars on the open that fail and reverse. This can oppose a trader to large losses due to the bars often being big. The range often gets smaller as the day progresses, making it difficult for a trader to recover from big losses on the open.
• Most traders should try and catch the opening swing that often forms after a double top/bottom or a wedge top/bottom.
• Traders should pay attention to the open of the day, especially if the market is below it and the bear has been weak. If the price is not far below the open, traders should be mindful of a possible rally above the open last in the day since the bulls want a close above the open to disappoint the bears.

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.