Emini daily chart
- The S&P E-Mini formed a strong bear breakout last Friday and yesterday was disappointing for the bears as there was no follow-through selling. The bears, however, remain hopeful that last Friday’s selloff marks the start of a second leg down, following the selloff that ended on September 9th.
- The bulls, on the other hand, want to prevent the bears from getting a second leg down after last Friday’s significant bear breakout.
- While the bulls managed to disappoint the bears yesterday, there is no strong buy signal above it. This suggests that there are likely sellers above yesterday’s high if the market goes above it.
- Although the market is currently within an overall trading range and it is expected that the bears will be disappointed, traders should still consider the possibility of the bear getting at least a small second leg down after last Friday’s bear breakout.
- If the bulls manage to create a double bottom with the September 9th low, they must generate more buying pressure.
Emini 5-minute chart and what to expect today
- In the overnight Globex session, the Emini is down 12 points.
- Following the 8:30 AM ET report, the Globex market experienced a recent selloff. The bears are hopeful that they will be able to achieve a breakout below the lows of the past two trading days and establish a bear trend today.
- Traders will closely watch to see if the bears can develop a bear trend right from the market open.
- Although there is an 80% chance of a trading range open and only a 20% chance of a bear trend right from the open, traders should still consider the possibility of a trend from the open.
- It is not uncommon for trend days to open and initially appear like a leg in a trading range that eventually leads to gaps. Traders should keep this in mind today if the bears can create such a scenario at the open.
- As always, traders should expect a trading range open and may want to abstain from trading for the first 6-12 bars, unless they are comfortable using limit orders.
Yesterday’s Emini setups
Here are several reasonable stop entry setups from yesterday. Each buy entry is indicated by a green rectangle, and each sell entry by a red rectangle. Buyers of both the Brooks Trading Course and Encyclopedia of Chart Patterns have access to a nearly 4-year library of more detailed explanations of swing trade setups (see Online Course/BTC Daily Setups). Encyclopedia members receive daily updates of current charts in 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 they were not currently in the market, these entry points would be logical times for them to enter. Therefore, these are swing entries.
It is important to understand that most swing setups do not necessarily result in swing trades. As soon as traders become disappointed, many exit their positions. Those who exit often prefer to do so with a small profit (scalp), but may have to exit with a small loss.
If the risk is too high for your account, it is advisable to wait for trades with lower risk or consider trading an alternative market like the Micro Emini.