S&P 500 E-Mini: Breakout Below Bear Channel Likely
2023.10.27 10:34
S&P Emini Pre-Open Market Analysis
- The yesterday formed a bear breakout, closing near its low.
- The bull will see yesterday as a bear breakout below a bear channel (August 18th, October 3rd).
- They will expect the bear breakout to fail, leading to a reversal in the next couple of days and a test of the channel’s top.
- The selloff from the October high is tight, increasing the odds that any reversal up will be minor and lead to a trading range.
- Bulls made money buying below the August 18th low. This means that the odds are that the market will test the October 3rd low in the next week or two and allow the bulls to make money.
- The market is getting far from the moving average. This will increase the odds of a reversal and test of the moving average.
- Yesterday reached the May 4th higher low, which will act as support. Today may form a bull reversal bar. This is also because today is Friday, and the bull will try to create a tail below this week’s bar on the weekly chart.
What to Expect Today
- Emini is up 21 points in the overnight Globex session.
- The Globex market is in the middle of yesterday’s range. The market is deciding on a test of yesterday’s high or low.
- Traders will expect today’s open to have a lot of trading range price action. As I often say, most traders should wait 6-12 bars before placing a trade. It is common for the market to have a lot of reversals on the open, which can trap traders on the wrong side of the market.
- Most traders should try and catch the opening swing that often begins before the end of the second hour, after the formation of a double top/bottom or a wedge top/bottom.
- Today is Friday, so weekly support and resistance are essential. The bulls may try to get today to be a bull reversal bar on the daily chart, which would create a tail on the weekly chart.
- Traders should be prepared for a possible surprise breakout late in the day as traders decide on the close of the weekly chart.
- Lastly, Traders must remember to be patient on the open and not deny the price action.
Yesterday’s Emini Setups
S&P 500 Emini-5-Minute Chart
Here are reasonable stop-entry setups from yesterday. I show each buy entry bar with a green arrow and each sell entry bar with a red arrow. 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.
