S&P Emini Pre-Open Market Analysis
- The bears believe yesterday set up a Low 2 and want the bulls who bought above yesterday’s high to be trapped by a bear reversal bar today.
- The bulls broke out yesterday and hope it is the start of a successful breakout and test of the September 1st high.
- The bears want the bulls who bought above yesterday’s high to be trapped by a bear reversal bar today.
- If today reverses down, especially if it closes low, it could trap the bulls and lead to a second leg down from the September 7th breakout.
- The bulls want the opposite; they expect follow-through buying and to force the bears to buy back short.
- The weekly chart will likely attempt an inside bar this week, which could result in consecutive inside bars. This increases the risk of disappointing the bulls and staying below the September 5th high.
- Today will probably not have a strong bull trend bar and might be a bear bar or weak bull bar.
What to Expect Today
- The Emini is down 20 points in the overnight Globex session.
- The Globex market has been sideways during the overnight session and recently had a strong downside breakout.
- The bears hope this breakout leads to a strong bear trend day during the U.S. session, but there is only a 20% chance of a trend from the open.
- This means there is an 80% chance of a trading range open. Traders should expect a lot of trading range price action at the open today. Most traders should consider not trading for the first 6-12 bars unless they are comfortable trading with limit orders, wide stops, and scaling in lower.
- There is at least an 80% chance of a swing trade starting before the end of the second hour, usually after a double top/bottom or a wedge top/bottom forms.
- Traders should try to catch the opening swing because it often doubles the opening range at least 40% of the time.
- Weekly support and resistance are important today since it’s Friday. Traders should be aware of Monday’s high, which is the high of the week. The market may form an inside bar on the weekly chart, and the high of the week could act as resistance.
- Since it’s Friday, there is an increased risk of a surprise breakout late in the day as traders decide the fate of the weekly chart. If the market gets a surprise breakout late in the day, traders should not ignore the price action.
Yesterday’s Emini Setups
Here are several reasonable stop-entry setups from yesterday. Each buy entry is shown with a green rectangle, and each sell entry is shown with a red rectangle. Buyers of both the Brooks Trading Course and Encyclopedia of Chart Patterns have access to a 4-year library with more detailed explanations of swing trade setups (see Online Course/BTC Daily Setups). Encyclopedia members also get current daily charts added to the Encyclopedia.
These charts present an Always In perspective. If a trader was trying to be Always In or nearly Always In a position all day and was not currently in the market, these entries would be logical times to enter. These are swing entries.
It’s important to note that most swing setups do not lead to swing trades. When 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, it’s recommended to wait for trades with less risk or to trade an alternative market like the Micro Emini.
