S&P 500 E-Mini Bears Want Double Top Test of 4,500
2023.07.26 10:27
- The bears are hopeful that yesterday is forming a micro double top with the July 19th high. Next, they want a break below the neckline (July 20th) and a measured move down to the moving average and the 4,500 big round number.
- The Emini is testing the July 19th high and will likely find sellers at this price level. This also corresponds to 4,600, which is a likely resistance level.
- The market has been above the moving average for over 35 bars which is a sign of strong momentum for the bulls.
- The bulls are happy to buy above the moving average when the momentum increases justifies buying at a more expensive price. Traders see the moving average as a fair price; however, once the market begins to go sideways, fewer bulls are willing to buy far away from the moving average. This means that the market has to get closer to the moving average; in this case, the market will likely have to reach the moving average.
- At the moment, the odds favor a 100-point selloff down to 4,500 before the bulls get a 100-point rally up to 4,700.
- Overall, traders should expect sideways to down trading over the next few days.
Emini 5-minute chart and what to expect today
- Emini is down 18 points in the overnight Globex session.
- Today, there is an FOMC Report at 11:00 AM PT/ 2:00 PM EST. Traders should expect the market to try and get neutral going into the report. This means that the opening may have a lot of trading range price action.
- As I often say, most traders should consider not trading the opening session’s first 6-12 bars. The open usually has multiple reversals and failed breakouts, so one can quickly take 1-3 losses. If this happens, they will likely find themselves desperately spending the rest of the day trying to reach breakeven.
- The opening bars can often be big, so if trading, it is important to be aware of this and trade small.
- When the fed report is released, a good rule of thumb is to trade 20% of one’s normal position size.
- Traders should wait for the close of the second bar after the FOMC report is released at 2:00 PM EST before placing a trade.
- Overall, traders should expect a lot of trading range price action on the open. However, they must not be in denial if the market starts to form strong trend bars on the open.
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.
