S&P 500 E-Mini Bears Look to Trap Bulls
2023.09.15 10:20
S&P Emini Pre-Open Market Analysis
- The Bears see yesterday as the setup for a Low 2. They want the committed bulls who bought above yesterday’s high to get trapped by a bear reversal bar today.
- The bulls got an upside breakout yesterday and they are hoping this is the start of a successful breakout and test of the September 1st high.
- The Bears see yesterday as the setup for a Low 2. They want the committed bulls who bought above yesterday’s high to get trapped by a bear reversal bar today.
- If today reverses down, especially if it closes on its low, that would potentially trap the bulls and lead to a second leg down of the breakout that ended on September 7th.
- The bulls want the opposite; they know some bears will front-run the possible Low 2 (second entry sell) setup. They want today to lead to more follow-through buying and force the bears to buy back short.
- I have been saying that the weekly chart will probably try for an inside bar this week, which could create consecutive inside bars on the weekly chart. This makes me think there is an added risk of today disappointing the bulls and staying below the September 5th high.
- Overall, today will probably not form a strong bull trend bar and will likely be a bear bar or a weak bull bar.
What to Expect Today
- Emini is down 20 points in the overnight Globex session.
- The Globex market has gone sideways during the overnight session and recently formed a strong downside breakout.
- The bears are hopeful that the recent bear breakout will lead to a strong bear trend day during the U.S. Session. While this is possible, there is only a 20% chance of a trend from the open.
- This means an 80% chance of a trading range open. Traders should expect the open today to have a lot of trading range price action. Most traders should consider not trading for the first 6-12 bars unless they are comfortable trading with a limit order, using wide stops, and scaling in lower.
- There is at least an 80% chance of a swing trade beginning before the end of the second hour. It is common for the sewing trade to begin after the formation of a double top/bottom, or a wedge top/bottom.
- Traders should try and catch the opening swing because it typically will double the opening range at least 40% of the time.
- Today is Friday, so weekly support and resistance are essential. Traders should be aware of Monday’s high, which is the high of the week. The market may form an inside bar on the weekly chart, which means that the high of the week might act as resistance.
- Lastly, since today is Friday, there is an increased risk of a surprise breakout late in the day as traders decide on the fate of the weekly chart. If the market gets a surprise breakout late in the day, one must not be in denial of the price action.
Yesterday’s Emini Setups
S&P 500 Emini 5-Min Chart
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 the 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.
