S&P 500 E-Mini Buyers Lurk Below Monday’s Low
2023.09.13 10:16
S&P Emini Pre-Open Market Analysis
- The triggered a low 1 yesterday by falling below Monday’s low. There are probably buyers below Monday’s low for a scalp. This means that today may rally, allowing bulls to make a scalp buying below Monday’s low.
- If today does rally, traders will pay attention to how determined the bulls are. If the bulls scalp out and the market sells off after any rally, that would be a sign of a lack of conviction by the bulls.
- Low 1 setups often have buyers below and lead to deeper pullbacks, followed by trend reception in the direction of the Low 1. This means the market may go above Monday’s Low 1 and try to form a second entry short in the next couple of days.
- The bears are hopeful that the breakout below Monday’s Low 1 short will lead to a strong bear breakout, trapping the bulls who bought Monday’s Low 1.
- Overall, traders will pay close attention to how determined the bulls are to buy below Monday’s Low 1.
What to Expect Today
- The Globex market has gone sideways in a tight trading range on the 60-minute chart for most overnight hours.
- The CPI 8:30 AM EST Report led to a failed bear breakout and reversal. This means the market may try to rally into the U.S. Session.
- Traders should assume that the open will have a lot of trading range price action.
- In general, there is an 80% chance of a trading range open and only a 20% chance of a trend from the open.
- This means that traders should consider not trading the first 6-12 bars unless they are confident with limit order trading and making quick decisions. By waiting for 6-12 bars, a trader gives up trading opportunities for more clarity on the day structure.
- There is often a swing trade that begins before the end of the second hour after the formation of a double top/bottom or a wedge top/bottom. This means a trader can often look to buy on a stop entry after forming one of the abovementioned patterns and have a 40% chance of catching a swing that will double the opening range.
- The most important thing on the open is to trade the chart in front of you, not what you think the market will do. Price is truth, and a trader must never deny the chart in front of them.
Yesterday’s Emini setups
S&P 500 Emini 5-Minute-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.
