S&P 500 E-Mini: Profit Taking Likely at Oct 6 Low
2023.10.24 10:15
S&P Emini Pre-Open Market Analysis
- The found profit taking below the October 6th low and limit order bulls bought for a scalp.
- While yesterday’s bull doji is a disappointment bar for the bears, it is not enough to undo the recent three large bear trend bars.
- The bulls are hopeful that the selloff below the October 6th low will lead to a wedge bottom (August 18, October 6th). If this will form a wedge bottom, the bulls need to develop more buying pressure.
- Without more buying pressure, the odds favor a second leg down.
- The bulls got seven overlapping bars above the August 18th low two weeks ago. This means that bulls could make money buying below the August 18th low and increase the odds that bulls will be able to buy below the August 16th low and make money.
- Some bulls may hesitate to buy below the August 16th low without a credible stop entry. They see the recent three-bar selloff as being strong enough for lower prices.
- Overall, the Bears have a credible shot at getting a second leg down and a test of the midpoint (4,172) of the 2022 rally that began in October. The Bulls need to develop more buying pressure if they are going to get a successful reversal up.
What to Expect Today
- Emini is up 17 points in the overnight Globex session.
- The overnight Globex market rallied and tested near the highs of October 23rd. However, sellers were near its high, and the market is going sideways.
- Today will probably have a lot of trading range price action. This means traders should pay close attention to the day’s open.
- As I often say, traders should consider waiting for 6-12 bars before placing a trade.
Yesterday’s Emini Setups
S&P 500 Emini 5-Min 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.
