Emini daily chart
- o The S&P 500 Futures formed another doji bar in the middle of a tight trading range over the past four trading days.
- o The market is deciding if it needs to test the moving average before reaching the September 1st high. The market is so close to the target that it may reach it in the next two days.
- o The September 1st high is important because it is the start of the bear channel. Channels evolve into trading ranges, which means that the odds are this price level will be tested again.
- o The odds are any reversal down will lead to a trading range and not a strong downside breakout. This means that the moving average will likely act as support.
- o If the bears will take control, they need to show signs of strength. At a minimum, the bears need to get bear bars closing on their lows. Next, the bears must form consecutive trend bars with closes on their lows.
- o Because the bulls are losing momentum, the odds are the market will get a pullback in the next day or two. This increases the odds that today will have a bear close on the daily chart.
Emini 5-minute chart and what to expect today
- o Emini is up 22 points in the overnight Globex session.
- o The Globex market rallied to a new high during the early morning hours.
- o The September 1st high is at (4,597), only 7 points from the day’s high. This is a close enough test of an important magnet that the market may be unable to escape the gravitational pull of the September 1st high.
- o The higher time frames are in a bear channel. This increases the odds of sellers on the open of the early morning Globex rally, leading to a failed bull breakout.
- o Because the daily chart is overbought, traders should pay attention to the day’s open. This is because the market will probably close below the day’s open today or tomorrow.
- o Traders should expect the day’s open to have a lot of trading range price action. This means that most traders should not trade for the first 6-12 bars unless they can make quick decisions.
- o Most trades should focus on the opening swing that often begins before the end of the second hour. It is typical for the opening swing to start after the formation of a double top/bottom or a wedge top/bottom.
Yesterday’s Emini setups
Here are reasonable stop entry setups from yesterday. I show each buy entry bar with a green arrow and each sell entry bar with a red arrow. 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 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.