S&P E-Mini: Continued Disappointment for Bulls and Bears
2023.04.21 10:12
Emini daily chart
- The sold off late in the day yesterday, preventing the bulls from getting a bull bar closing on its high. Likely Emini continued disappointment for both bulls and bears.
- The market has had a lot of overlap since April 4th. This increases the risk that the market is evolving into a trading range.
- The 20-period Exponential Moving Average is around 4,115, close enough for the market to touch it.
- Yesterday’s close is in the middle of two important price levels, the March 22nd high and the February 2nd high.
- Typically, when the market is going sideways and in the middle of two important price levels, it is a clear sign of trading range price action.
- This means that the market is deciding on which target to test (March 22nd or February 2nd high), and traders should assume the probability is very close to neutral.
- The bulls probably still have a slight advantage since the channel up from the March low is tight. However, the probability is not 60% for the bulls.
- While the bears had done an excellent job, they have not taken control of the market. The bears have done enough to make the bull breakout up to April 4th convert into a trading range.
- The bears now need to increase the selling pressure if they are going to get a downside breakout and close below the March 22nd high.
- The reason March 22nd high is important because it is a big bear bar, and it was a possible lower high in the bear channel.
- The bears that sold the March 22nd high never got a chance to exit without a loss. Typically, when the market is in a trading range, it will allow traders who bet against breakouts (sell above bars or buy below bars) to use wide stops and scale in to make a profit or at least avoid a loss.
- Overall, traders should expect continued disappointment and confusion for the bulls and the bears. There are probably buyers below and sellers above yesterday’s bar.
Emini 5-minute chart and what to expect today
- Emini is up 1 point in the overnight Globex session.
- The Globex market has been in a trading range for the overnight session.
- At the moment, the market will probably open near yesterday’s close.
- Traders should expect a trading range open during the U.S. Session.
- As I often say, most traders should wait for 6-12 bars before placing a trade. Waiting for 6-12 bars gives a trader information on how the day will likely unfold.
- On the open, there is a 50% chance that the initial move reverses and an 80% chance that the initial move has at least a minor reversal.
- Today is Friday, so weekly support and resistance are important. The open of the week is 4,161, which will be magnet today.
- Traders should be prepared for a possible surprise breakout late in the day due to traders deciding on the close of the weekly chart.
- Lastly, traders should be open to anything. It is important to become comfortable changing your opinion about the market once you conclude your premise has changed.
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.
