S&P Emini Pre-Open Market Analysis
- The S&P Emini is becoming oversold, following the selloff down from the October high.
- The bears are likely becoming exhausted, which means the probability will probably pull back in the next couple of days and test 4,200.
- Exhausted bears do not mean a reversal into a bull trend. At a minimum, it means a brief pullback lasting 1-3 bars, but likely more.
- The bulls see the October 3rd low as a logical target, and they will begin to establish long betting that the market will bottom out soon and rally back to the October 3rd breakout point low.
- Overall, traders will begin to expect a pullback over the next couple of days, which means the bears who are selling closes will likely begin to be disappointed soon.
What to Expect Today
- The overnight Globex market has been channeling up for several hours.
- The bulls want the open to gap up and for the daily chart to form a big bull trend bar, trapping bears on the daily chart.
- There is an 80% chance of a trading range open and only a 20% chance of a trend from the open lasting all day.
- Because there is an 80% chance of a trading range open, most traders are betting off waiting for at least 6-12 bars before placing a trade. Waiting allows a trader to understand the structure of the day better, and they can avoid getting trapped in the open.
- Most traders should focus on catching the opening swing that often begins before the end of the second hour. It is typical for the opening swing to start after the formation of a double top/bottom or a wedge top/bottom.
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 the 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.