S&P Emini Pre-Open Market Analysis
- The S&P 500 Futures reversed up after falling below Monday’s Low 1 short. The bulls will see yesterday as a buy signal bar for a second entry buy. However, the signal bar is a weak doji, which will lower the probability of buying above it.
- The bulls want today to become a strong entry bar and force bears to exit above it.
- The bears are hopeful that there will be sellers above Wednesday’s buy signal bar, which would create a second entry sell setup. They want the bulls buying above yesterday’s second entry buy to get trapped.
- Next, the bears want a second leg down and a test below the September 7th low.
- Overall, traders will pay close attention to see what kind of follow-through buying the bulls can get. If the follow-through is weak, the higher the probability the bears will form a second entry short in the next day or two.
Emini 5-Minute Chart and What to Expect Today
- The Globex market rallied above yesterday’s high and is testing near the September high. The Bulls hope they will get a strong rally today for the reasons mentioned regarding the daily chart.
- Traders should assume that today will have a lot of trading range price action, especially during the first 6-12 bars. This means that traders should use caution during the first hour of trading and consider not trading unless they are comfortable with limit orders.
- Traders should pay attention to yesterday’s high since it will likely be an important magnet today.
- There is an 80% chance of a swing trading developing before the end of the second hour. It is common for the swing trade to begin after the formation of a double top/bottom or a wedge top/bottom.
- Traders should try and catch the opening swing because there is at least a 40% chance the swing will double the opening range.
- Traders should remember that even with the possibility of a bull trend from the open, traders should remember that the odds still favor a trading range, not a bull trend.
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.