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S&P 500 E-Mini: Buyers Below Yesterday’s Reversal Bar

Published 09/01/2023, 09:57 AM
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E-Mini daily chart
  • The E-Mini formed a bear reversal bar yesterday. However, there are more likely buyers below.
  • The bears are hopeful that yesterday’s reversal down is forming a 2nd leg trap in the middle of a trading range. The problem with this argument is that yesterday’s bear reversal bar is small, which increases the odds of buyers below.
  • The bears want to reach the August 24th breakout point high and close the gap. The Bulls want to keep this gap open as a sign of strength.
  • The bears need to show more signs of strength if they are going to get a reversal down. At a minimum, the bears need to create follow-through selling below yesterday’s bear reversal bar.
  • If the bears can get 2-3 consecutive bear bars closing below their midpoints, traders will be convinced that the bears are taking control.
  • More likely, the recent bull breakout is strong enough for a second leg up.

E-Mini 5-minute chart and what to expect today

  • E-Mini is up 25 points in the overnight Globex session.
  • Today will probably gap up, meaning traders should expect the bulls to get at least a small second leg up.
  • The market will probably go sideways on the open and get closer to the moving average.
  • Traders should be prepared for many trading range price action on the open and for the market to go sideways for the first 6-12 bars.
  • Today is Friday, so weekly support and resistance are important. The bulls want today to close near the high of the week. The bears want today to become a bear trend day and damage the bull bar on the weekly chart.
  • Traders should be prepared for a surprise breakout up or down today in the session’s late hours. This is due to traders deciding on the close of the weekly chart.
  • Lastly, traders should remember that there is an 80% chance of a trading range open. There is a 50% chance that the initial move up or down will completely reverse and go the opposite direction. There is an 80% chance of at least a minor reversal following the initial breakout up or down.

Yesterday’s E-Mini setups

SP500 Emini 5-Minute-Chart

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