E-Mini Traders Likely to Face More Sideways Trading
2023.05.15 09:45
Emini daily chart
- traders likely to face more sideways trading in a tight trading range on the daily chart.
- The market is in breakout mode, which means traders should assume that the probability is close to 50% for both the bulls and the bears.
- The bears want a downside breakout and a test back to 4,000 Big Round Number.
- The bulls want the upside breakout and a rally to the February high. The bulls also have a credible bull breakout of a bear flag (March 13th low to March 22nd high) that projects up to 4,300.
- Since the market is in breakout mode, most traders should wait for a clear breakout with follow-through and assume that all breakouts will fail until then.
- When the market is in a triangle or a tight trading range, it always looks like the breakout will happen soon. However, the market continues sideways for a long time, so it is important not to be too eager.
- The most important thing to remember is that the market is neutral and balanced.
Emini 5-minute chart and what to expect today
- Emini is up 12 points in the overnight Globex session.
- The overnight Globex market rallied from near the lows of a trading range that began over a week ago.
- The market is still within a tight trading range on the daily chart, which means that odds are today will have a lot of trading range trading.
- Traders should expect a lot of trading range price action today. This means that traders should pay attention to the day’s open as it will likely be a magnet during the day.
- Most traders should wait 6-12 bars before placing a trade unless they can make quick decisions and are comfortable with limit orders. There is often a report around bar 6, leading to a fast breakout and trapping traders into a losing trade. This is why most traders should wait until after bar 6 before placing a trade.
- Most traders should try and catch the opening swing that will typically begin before the end of the 2nd hour. This is at least an 80% chance of an opening swing and a 40% chance that the opening swing will double the range of the day. The opening swing often begins after the formation of a double top/bottom or a wedge top/bottom. This provides great risk/reward for traders.
Friday’s Emini setups
Here are several reasonable stop-entry setups from Friday. 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.
