E-Mini May Pullback for a Few Days
2023.04.28 10:25
Emini daily chart
- Yesterday was a strong bull breakout that completely reversed the recent bear breakout ending on April 26th. may pullback for a few days.
- The bears should have gotten a second leg down, which means some bears sold the high of April 26th, looking for a second leg down.
- Any bears who sold got trapped during yesterday’s intense bull rally. These bears are probably so disappointed that they will probably be happy to exit shorts on any brief pullback.
- Some bulls did not expect yesterday to be as strong as it was and are trapped out of a good buy. These bulls will probably look to buy a pullback, betting that yesterday’s breakout will have a second leg up.
- Since yesterday’s breakout was a low-probability event, it will probably lead to a second leg up. This means that the first reversal down will likely fail.
- Yesterday’s breakout is climactic, meaning today might be a pullback bar, disappointing the bulls. Climatic bars often pull back for 1-3 bars, meaning the market may stall for a couple of days.
- The bears are hopeful that yesterday’s rally will lead to a lower high and stay below the April 18th high. They want yesterday’s rally to form a head and shoulders top, with April 4th being the left shoulder, April 18th beginning the head, and April 27th being the left shoulder.
- While the odds favor the bulls getting a second leg up, traders must consider the possibility of the bulls getting trapped and the market reversing down sometime next week, trapping bulls into buying the top of a trading range.
- Overall, the odds favor a second leg up after yesterday’s bull breakout. However, if the bulls fail to get follow-through in the next day or two, more and more traders will begin to exit longs which could lead to a reversal back down. Even if today is a bear inside the bar, there will probably be buyers below.
Emini 5-minute chart and what to expect today
- Emini is down 9 points in the overnight Globex session.
- The overnight Globex market pulled back following yesterday’s strong rally.
- At the moment, there are probably buyers below, and the bulls will get a second leg up.
- While today may be another strong bull trend day, traders should be open to the possibility of a disappointing day as bulls take partial profits after yesterday’s climactic rally.
- As I often say, most traders should wait 6-12 bars before placing a trade. This will allow them to gain more clarity on the day structure.
- Most traders should try and catch the opening swing that typically begins before the end of the second hour, following a double top/bottom or a wedge top/bottom.
- Today is the month’s last trading day and the week’s final day. This means that traders should be opening to the possibility of a surprise breakout late in the day, as traders decided on the close of the monthly and weekly chart.
- Overall, if the open sells off traders, should pay attention for since of an opening reversal and a trading range 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.
