Emini daily chart
- The S&P 500 Futures formed an upside breakout on August 29th and found follow-through buying yesterday. This is good for the bulls and increases the odds of higher prices.
- The bears are hopeful that the rally leading to yesterday’s high will become a 2nd leg trap in an overall trading range.
- More likely, the bulls will get at least a small 2nd leg up. This means that traders will buy and scale in lower.
- Since the market is in the middle of an overall trading range on the daily chart, there is an additional risk for the bulls buying at this price level.
- The bulls know there is an added risk of getting trapped in the middle of a trading range. While the odds favor a second leg up, bulls will be quick to exit longs if the bears are able to form a second entry sell.
- Overall, traders will pay close attention to the follow-through buying over the next few days. Traders should expect the bulls to become disappointed soon due to the market being in a trading range.
Emini 5-minute chart and what to expect today
- The overnight Globex market has gone sideways for the past several hours.
- Traders should expect a lot of trading range price action today during the U.S. Session.
- The bulls are hopeful that today forms an early low of the day and is another bull trend bar on the daily chart.
- More likely, today will disappoint the bulls and have a lot of trading range price action.
- Traders should expect the first 6-12 bars to go sideways. This means that most traders should consider using caution when trading during the first hour due to the probability of breakouts reversing.
- Most traders should try and catch the opening swing that often begins before the end of the second hour, after the formation of a double top/bottom or a wedge top/bottom.
- Traders should pay attention to yesterday’s close as well as the open of the day today. Both will likely be important magnets today.
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 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.