Stock Markets Analysis & Opinion

S&P 500 E-Mini Could Trade in a Rage After a Bullish Start to the Session

S&P Emini Pre-Open Market Analysis

  • The S&P Emini formed a High1 buy signal bar. High 1 setups typically lead to pullback and trend resumption. This means there might be sellers above yesterday’s high, leading to a brief pullback lasting 1 – 2 bars.
  • Just because there might be more sellers above yesterday’s high, does not make it a great short. The bar is closing on its high and High 1 signal bars, such as this one, often get trend resumption after a pullback. This means traders should look for the trend resumption, not a sell above the bar.
  • The problem with the bulls is that yesterday was a High 1 buy signal with leg 2 of an overall trading range. This increases the risk of a deep pullback and possible 2nd leg trap.
  • The odds slightly favor the bulls, and price testing is close to 5,300, which is a magnet based on the bull breakout of the double bottom (April 19th low to the April 29th high).
  • The bears do not mind a rally up to 5,300 as long as they can form a major trend reversal and break below the April low. The next target for the bears would be the low of the year (January 5th), which is also the bottom of the bull channel on the daily chart.
  • Overall, traders will pay attention to what kind of entry bar the bulls can get following yesterday’s high 1 buy signal bar. The bulls want a strong entry bar closing on its high, trapping the bulls out of a winning long position and the bears into a losing position.

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What to Expect Today

  • Emini is up 2 points in the overnight Globex session.
  • The Emini formed a bull breakout on the 15-minute chart during the 8:30 AM EST report bar. However, the follow-through bar is a bear doji bar, which is disappointing for the bulls.
  • The bears are hopeful that the 8:30 AM EST bull breakout will fail and lead to a reversal down.

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.

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