S&P Emini pre-open market analysis
- The S&P 500 Futures is far from the moving average in an overall trading range. This increases the odds that the market will have to get closer to the moving average before the market goes higher.
- The Emini formed a doji closing at yesterday’s open, following Monday’s climactic bull breakout bar. Since Monday was climactic, the odds favor sideways trading for 1-3 days and a test of Monday’s low.
- The bulls still expect a test of the September 1st high, the top of the bear channel.
- The market can sell off to the moving average or go sideways which would drag the average price up to the current price level.
- Even if the market sells off to 4,400 the odds will still favor a test of the September 1st top of the bear channel.
- The market may hesitate under the September 1st high and go sideways. It is common for trading ranges to go sideways and under important resistance, making traders question if the market will go above the resistance level (September 1st) or if it will have to pull back first.
- Overall, the odds favor sideways trading because the market is far away from the moving average.
Emini 5-minute chart and what to expect today
- Emini is up 15 points in the overnight Globex session.
- The Globex market rallied overnight and is testing near yesterday’s highs.
- The bulls are likely disappointed by the overnight pullback and will look to take profits around yesterday’s Globex high.
- Traders should expect today to have a lot of trading range price action, especially during the first hour of the U.S. Session.
- Most traders should consider not trading for the first 6-12 bars, unless they are comfortable with limit order trading and making quick decisions.
- Most breakouts fail on the open and lead to sideways trading. This means that traders must be careful on the open.
- Most traders should focus on catching the opening swing that often begins before the end of the second hour. It is common for the market to form a double top/bottom, or a wedge top/bottom on the open. This means a trader can wait for the market to form one of the above patterns before trading.
- Since tomorrow is Thanksgiving, today can be a slow day. Traders must trade the chart in front of them and not what they hope the market will do.
- A trade is never overdue and forcing trades in a tight trading range is a quick path to having a loss.
- The goal of a trader is to make money. To make money, one must avoid taking bad trades that have a poor trader’s equation. This means that a trader must be disciplined to not trade when the trader’s equation is weak.
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.
