E-Mini Bears Likely to Be Disappointed Today
2023.04.27 11:01
Emini daily chart
- The bears got follow-through on the daily chart after Tuesday’s bear breakout, but likely to be disappointed today. This is a strong enough breakout with follow-through to have at least a small 2nd leg down, which means the first reversal up will probably fail.
- The bulls want the past two days to be a failed breakout of the April 6th low and test of the March 22nd high. Next, the bulls want a strong reversal bar today.
- Even if today is a strong reversal up, the odds are there will be more sellers above, and the bears will get at least a small 2nd leg down.
- It is possible that yesterday’s selloff is a second leg trap, with leg 1 ending on April 20th. However, the channel down from April 18th is very tight. This increases the risk of any rally leading to a lower high and a second leg down.
- Also, it is important to remember that most 2nd leg bear traps do not reverse the market into bull trends. This means that if the bulls get a reversal up, it will probably lead to sideways trading, even if it goes above the top of the bear breakout (April 25th).
- The bulls need to undo the damage caused by the bears over the past two days. At a minimum, the bulls need to get some micro double bottom. However, as I said above, the bears will probably get at least a small 2nd leg down.
- The 4,000 big round number is an obvious target for the bears. The Emini has spent well over a year oscillating around 4,000, and it will probably continue to be an important magnet for some time.
- Overall, the Emini will probably go a little bit lower; however, the market is in a trading range, which means that traders should expect the bears to be disappointed by whatever selloff they get.
Emini 5-minute chart and what to expect today
- Emini is up 18 points in the overnight Globex session.
- The overnight Globex market rallied since late yesterday afternoon.
- The bulls want to undo as much damage as possible caused by the bears of the past two days.
- While the bulls may get a reversal up and strong trend day, more likely, the bulls are so disappointed they will scalp out. This means that traders should be prepared for a possible opening reversal following the gap up.
- As I often say, traders should be prepared for 6-12 bars sideways trading. This means that most traders should be cautious trading the first 6 bars at a minimum. By waiting for the bars to develop, a trader will gain more information on the formation of the day.
- Most traders should try and catch the opening swing trade that typically begins before the end of the second hour. It is common for the opening swing to develop after forming a double top/bottom or a wedge top/bottom.
- Lastly, traders must be open to the possibility of anything and not be in denial if today is a strong bull trend or another strong bear trend day.
Yesterday’s Emini setups
Here are several reasonable stop-entry setups from yesterday. I show each buy entry with a green rectangle and each sell entry with a red rectangle. 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.
