S&P 500 Emini: Learn how to trade swing trading price action
The Emini has sold off for 3 weeks, but the selling on the 60 minute and daily charts lacked consecutive big bear trend bars, and it is still above the 2026 bottom of the Final Bull Flag on the daily chart.
That is also the April low. Since April broke above the top of the 2 year trading range, if the Emini falls below that low, it will trigger a sell signal on the monthly chart. With the monthly chart so strongly up and with April having a bull body, the odds are that there will be more buyers than sellers below that price. Also, the weekly chart had an 11 bar bull micro channel, which is a sign of extremely eager bulls. Usually a pullback below the channel lasts only 1 – 3 bars before it is bought and the Emini tests the top of the channel (the all-time high). Since this is the 2nd week below the channel, there is a 60% chance that the selling will end either this week or next week.
The selling has been deep enough and has contained enough bars on the daily chart to create a Big U, Big Down pattern. That is a sign of a confused market. A confused market has reasons to buy and to sell, and the result is usually a trading range. A trading range is likely for several more weeks because traders will sell the 1st rally after a pullback from a buy climax. The rally from the February lows on the daily and weekly charts was unsustainable and therefore a buy climax.
Most of the days over the past several weeks have had at least one swing up and one swing down. That is consistent with the trading range price action on the daily chart. Tomorrow is the monthly unemployment report so today will probably try to be a neutral day, which means more trading range price action.
It is always possible that the Emini can accelerate down and have a big bear trend day today. That is unlikely because the selloff looks more like a pullback than a bear trend. It lacks the urgency and persistence of a bear trend. Since the selling is likely to end by the end of next week, it can end any day over the next week. This means there might be a big bull trend bar. It would represent traders deciding that the pullback has ended and that the bull trend has resumed. They will look for a test of the April all-time high.
The Globex market rallied strongly and then sold off strongly. It has been in a trading range for a couple of hours, although it is still up 6 points. Most traders will look for a swing up and down today, but they do not know which will come first. If there is going to be a trend day, a bull trend is more likely after a week selloff that has lasted 3 weeks. That means traders should be ready for a pain trade.
Whenever one thing is more likely, the market sometimes does the opposite. When it does, it can do it relentlessly, creating a lot of pain. The possible pain trade today would be a big bear trend day, which is unlikely. Most likely, today will have a lot of trading range price action, like most of the days over the past several weeks.