S&P 500 E-Mini Momentum Is Stalling
2023.07.25 10:36
pre-open market analysis
Emini daily chart
- The Emini has been above the 20-period exponential moving average (Blue line) for 38 bars. This is a sight of a tight bull channel and an Always In Long market.
- While the bulls have done a good job, they are beginning to lose momentum to the upside. This increases the odds of sideways trading as bulls take partial profits and bears sell above bars.
- Traders are happy to buy above the moving average when the momentum is strong; however, as the moment begins to dry up, traders will see the market as expensive and overbought if the market is far away from the moving average. This increases the odds that the market will have to pull back and get close to the moving average.
- The market broke above last Friday’s inside bar yesterday but failed to close above it. This is a sign of hesitation and weakness by the bulls.
- Traders should be open to the possibility of the bears getting a second leg down following the three-bar microchannel.
- Overall, traders should expect the market to go sideways, get closer to the moving average, and possibly test back to 4,500.
Emini 5-minute chart and what to expect today
- Emini is down 2 points in the overnight Globex session.
- The Emini has been above the 20-period exponential moving average (Blue line) for 38 bars. This is a sight of a tight bull channel and an Always In Long market.
- While the bulls have done a good job, they are beginning to lose momentum to the upside. This increases the odds of sideways trading as bulls take partial profits and bears sell above bars.
- Traders are happy to buy above the moving average when the momentum is strong; however, as the moment begins to dry up, traders will see the market as expensive and overbought if the market is far away from the moving average. This increases the odds that the market will have to pull back and get close to the moving average.
- The market broke above last Friday’s inside bar yesterday but failed to close above it. This is a sign of hesitation and weakness by the bulls.
- Traders should be open to the possibility of the bears getting a second leg down following the three-bar microchannel.
- Overall, traders should expect the market to go sideways, get closer to the moving average, and possibly test back to 4,500.
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.
