S&P 500 E-Mini: Vacuum Test of 100-Day Moving Average in the Cards
2023.08.22 10:17
Emini daily chart
- The bulls see last week’s selloff as a sell vacuum test of the 100–day moving average. They are hopeful that today will form a strong reversal bar closing on it high.
- The bears will see any rally as a pullback from last week’s bear breakout below the wedge that ended on August 11th.
- In Bears will see the current two-day rally as a test of the August 11th bear breakout below the wedge bottom. They will sell around this August 11th low, trying to keep the breakout point open.
- The bulls will try to close the August 11th breakout point low, ending the argument of a successful bear breakout below the wedge bottom.
- Some traders will view the past two trading days as a strong enough reversal to get a small second leg up. Therefore, they will buy hopefully for at least a small second leg up.
- Traders buying know that the odds are that the first reversal up will likely be minor and lead to a trading range.
- Overall, traders will pay close attention today to see how determined the bulls and bears are. The bears want to prevent the bulls from getting three consecutive bull bars. The bulls want to create a big bull trend bar today, convincing bears to give up on the idea of a successful bear breakout.
Emini 5-minute chart and what to expect today
- Emini is up 17 points in the overnight Globex session.
- The 60–minute overnight Globex market rallied following yesterday’s rally. The bulls want today’s U.S. Session to form another strong bull trend day.
- However, more likely, the bulls will become disappointed.
- Today will likely gap up, which means traders should expect the bulls to get at least a small 2nd leg up.
- As always, traders should expect the open to have a lot of trading range price action on the open.
- If traders are uncomfortable with limit orders on the open, they should consider not trading for the first 6-12 bars.
- Traders should focus on trying to catch the opening swing trade that often begins before the end of the second hour after the formation of a double top/bottom for a wedge top/bottom.
Yesterday’s Emini setups
SP500 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 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.
