S&P 500 E-Mini Testing 4,500
2023.08.03 10:06
- The gapped down and is testing near the 4,500 big round number.
- The bulls hope the market will find strong support at 4,500 and the June high.
- The bears want a strong follow-through bar today, closing far below the moving average (blue line). Today will likely disappoint the bears and remind traders that the market is in a trading range.
- The market is transitioning from a tight bull channel to a trading range. The trading range will probably last several months and eventually test back to 4,400 and the June 26th low. However, the market could take several weeks to reach the June 26th low.
- The bulls want today to be a strong bull bar closing on its high. This would reverse yesterday’s bear trend bar, creating a buy signal bar at the moving average.
- The market has been away from the moving average for over 20 bars. This is a sign of strong buying pressure and increases the odds that the market will have difficulty breaking out below it without going sideways and developing more selling pressure.
- The August 16th high on the weekly chart is an important magnet. Some bears sold the August 16th high, willing to scale in higher. Those bears will likely buy back at least part of their short position at the August high. This will increase the odds that the market will reach the August high in the next several weeks.
- Overall, traders should expect the bears to become disappointed after yesterday’s strong bear close and for the market to go sideways around the moving average.
Emini 5-minute chart and what to expect today
- The Globex market sold off strongly and is currently well below yesterday’s low. The bears hope the market will gap down and form another bear trend bar on the daily chart.
- More like the market will have a lot of trading range price action.
- As I often say, most traders should expect a trading range open lasting at least 6-12 bars.
- Traders should pay attention to the day’s opening and yesterday’s low, as it will likely remain an important magnet for most of the day.
- Lastly, traders must not deny the price action in front of them. If the market is beginning to form trending price action, traders must find a way to enter at least a small position in the direction of the trend.
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.
