S&P 500 E-Mini Bulls Taking Profits
2023.12.21 10:26
Emini daily chart
- o The sold off yesterday and formed an outside down bar on the daily chart. This is likely due to momentum bulls taking profits.
- o Yesterday is strong enough that the odds favor a second leg down, even if there is a pullback first.
- o Yesterday’s close now traps the bulls long on the daily chart. These bulls are likely disappointed and eager to exit longs on any rally.
- o Today has the potential to form a bull bar; this would create a high 1 buy setup and likely lead to a second leg down.
- o The Bears will try to create follow-through selling today. They want to prevent a bull bar from forming.
- o Overall, the daily chart has been overbought for some time and will likely test down to the moving average. Bulls are probably no longer interested in buying higher and will now look to buy lower, closer to the moving average.
Emini 5-minute chart and what to expect today
- o Emini is up 35 points in the overnight Globex session.
- o The Globex market rallied during today’s 8:30 AM EST report.
- o Traders should expect today’s open to have a lot of trading range price action.
- o There is a 75% chance of a trading range open the lasting two hours, beginning before the end of the second hour.
- o There is a 50% chance of follow-through selling on the open, followed by a trading range.
- o Overall, traders should expect the open to go sideways. This means there is no rush to trade, and most traders should consider waiting for 6-12 bars.
Yesterday’s Emini setups
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 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.
