S&P Emini Pre-Open Market Analysis
- The S&P Emini sold off below the October 13th low. However, it failed to close below it. The bulls want today to reverse up, forming a second entry buy.
- The market is Always In Long after the rally to the October 11th bull breakout. It is essential to realize that this is a bull breakout within a trading range, not a bull trend. This means that traders expect a deep pullback, which is happening on the daily chart right now.
- Because the market is in a trading range, the current pullback could reach the October 5th breakout point high before the bulls get a reversal.
- The odds favor the Bulls getting a second leg up after the breakout that ended on October 11th. The longer the market goes sideways, the lower the probability for the bulls will be.
- Traders will pay close attention to see if the bulls can create a second entry buy and undo the damage caused by yesterday’s bear breakout.
- The bears want to prevent a strong second entry buy from forming, which would increase the odds of a bear breakout of a bear flag and a test of the October low.
What to Expect Today
- Emini is 3 points down in the overnight Globex session.
- There is an 80% chance that today will form a trading range open and only a 20% chance that today will form a trend from the open up or down. This means that traders should be cautious of any breakout on the open unless there is strong follow-through.
- Most traders should consider waiting for 6 – 12 bars before looking to place a trade. This will help traders avoid getting trapped by failed breakouts on the open.
- Traders should pay attention to yesterday’s low, as it will likely be an important magnet today. The bears want to close below it, and the bulls want today to close far above it.
Yesterday’s Emini Setups
Here are reasonable stop-entry setups from yesterday. I show each buy entry with a green arrow and each sell entry 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.