Stock Markets Analysis and Opinion
E-Mini Bears Hope For Second Leg Trap
2022.06.02 16:55
E-mini pre-open market analysis
- E-mini bears are hopeful for 2nd leg trap, wanting a three-bar bull bar rally up to May 27 and a test of the May 25 low.
- Bulls see the three consecutive bull bars up to May 27 as a strong enough bull breakout that will lead to a measured move projection up to the April 18 low. This is because trading ranges close open gaps.
- Bulls will soon reach last month’s high (4,303). However, the market could pullback to the May 25 low first below testing up to the May 4 high.
- The daily chart is in a trading range which makes me think the market will reach the April 18 low.
- The May 27 buy the close bulls were disappointed by the May 31 bear doji bar and got out breakeven (May 27 close 4,155.75).
- The Market tested the May 17 breakout point high yesterday and could not close it, which is good for the bulls. The bulls will try hard to keep this gap open and get a measuring gap based on the May 20 low to the May 17 high projecting up to around the April 18 low.
- When you have multiple measured move projections that project to around the same price level (April 18 low), it increases the odds that the market will get there.
- Overall, the market is deciding if the bulls will get a strong second leg up from the May 27 three bull bar breakout or if the bears will get their successful 2nd leg trap and test of the May 25 high.
E-Mini 5-Minute Chart
E-mini 5-minute chart and what to expect today
- E-mini is down 5 points in the overnight Globex session.
- The market will likely have a small gap on the open, and the odds are the gap will get closed.
- Bulls will want a second leg up from yesterday’s late reversal up during the day session.
- Bears will want a double top with the lower high from yesterday’s 12:00 PT area and a test down to yesterday’s low.
- Today will likely be a trading range day, so traders should expect limit order trading.
- Most traders should wait for a credible stop entry, such as a double bottom/top, a wedge bottom/top, or a strong breakout with follow-through breaking above/below several bars.
- If a trader has trouble on the open, they should consider waiting for 6-12 bars for more clarity. The open often has lots of reversals, so it is important not to be too eager to bet on breakouts. It is easy to take a big loss on the open, betting on a breakout that fails.
