S&P 500 E-Mini: Tight Trading Range at September High Likely

Emini daily chart

• The S&P 500 Futures are forming a tight trading range at the September 1^st high.
• Traders want to see a test of the moving average, around 4,515.
• Because traders expect a test of the moving average, traders know it can get tested in one of two ways.
• The market can breakout to the downside and reach it quickly, similar to what the EUR/USD did last week. The second option is that the Emini goes sideways and drags the moving average up to the current price level.
• The market is in a trading range near the top of the range. This increases the risk of a deeper pullback than what traders want.
• It is possible that a selloff could test the October 17^th high, which is an important breakout point within the overall trading range on the daily chart.
• Overall, traders expect a pullback to the moving average over the next few weeks. Without it, the upside is probably limited.
  
  

Emini 5-minute chart and what to expect today

• Emini is up 24 points in the overnight Globex session.
• The Emini will probably go sideways on the Open of the U.S. Session. Most traders should consider waiting for 6-12 bars unless they are comfortable making quick decisions because most breakouts fail.
• As I often say, most traders should focus on catching the opening swing that usually begins before the end of the second hour.  It is common for the market to form a double top/bottom or a wedge top/bottom before the second leg begins.
• Traders should expect a trading range open. There is only a 20% chance of a trend from the open.

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 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.