Emini daily chart
- The S&P 500 Futures reversed below last Friday’s low and closed as a bull reversal bar. The bulls are hopeful that today will rally and lead to a strong entry bar for the bulls and a test of 4,600.
- The bears will try their best to prevent the bulls from getting a strong entry bar following yesterday’s bull reversal bar.
- The bulls have the potential to get a rally over the next couple of days due to the recent selloff being a leg in a trading range. This means it is reasonable for the bears to exit above yesterday’s high.
- The channel up to the July high was tight and held above the moving average for over 40 bars. This is a sign of strong buying and increases the odds that the first reversal down will lead to a minor reversal.
- Tight bull channels typically evolve into trading ranges before becoming a bear trend. This means traders should expect sideways trading and a possible test back to 4,600 over the next few weeks.
- Overall, traders will pay close attention to how determined the bulls are to get a strong entry bar. If the bulls can get a strong entry bar following yesterday’s buy signal bar, it will increase the odds of higher prices and a test of 4,600.
Emini 5-minute chart and what to expect today
- Emini is up 6 points in the overnight Globex session.
- The overnight Globex market has gone sideways for the past several hours.
- Traders should expect a trading range open for at least the first hour on the open. As I often say, traders should consider waiting for 6-12 bars on the open before placing a trade. By waiting for 6-12 bars, a trader is gaining clarity on the type of day that is likely to be present.
- In Generally, there is an 80% chance of an open trading range. This means that 80% of the time, traders will not miss out on waiting for 6-12 bars before placing a trade.
- Traders should expect a trading range day but also be open to the possibility of a bull trend day as the bulls try to get a strong entry bar closing on its high.
- Because of yesterday’s climactic behavior late in the day, the open may go sideways for the first two hours of the session.
- Traders should pay close attention to the day’s open and yesterday’s high as both will probably be important magnets.
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.