S&P Emini Bulls Would Want a Second Entry Test of Dec. 6 Low
2022.12.26 14:35
Emini daily chart
- bears got a second leg down yesterday from the five-bar bear microchannel that began on Dec. 13. The Bulls want a second entry test rally to the Dec. 6 low.
- Yesterday’s breakout was strong. However, the bears could not get the market to close on its low or below the Dec. 20 low.
- Traders bought aggressively into yesterday’s close, causing the market to close well above yesterday’s midpoint.
- The Dec. 21 bull breakout bar was strong enough to get a second leg, even though it was a minor reversal in a five-bar bear microchannel. It is possible that yesterday was also a pullback from the Dec. 21 bull breakout, and today will form a second leg up for the bulls.
- Since the daily chart is in a trading range, traders should expect the bears to become disappointed by the pullback following the five-bar bear microchannel.
- Bulls bought the bottom of the month-long trading range on Dec. 6, and they will probably scale in lower and be able to exit back at the Dec. 6 low. This means that market is probably going back to the Dec. 6 low and possibly the 4,000 big round number soon.
- With only six trading days left in the year, the market will likely begin to go sideways between the 50% pullback of the October – December rally and the 4,000 big round number.
- Today is Friday, so weekly support and resistance are important. The low of last week is at 3,855.25, which is not far from the current price. The bears will want to close below it, and the bulls will want to close above it.
- Last week was a big outside down bar, and this week is the follow-through bar. The bears will try and get a downside breakout today and close the market on its low as much as possible. The bulls want the opposite and will try to keep the market from closing below last week’s low.
- Traders expect the bears to become disappointed today and for the market to rally above yesterday’s high. The bulls want today to be a bull bar closing on its high, forming a second entry buy for a test of the Dec. 6 low.
Emini 5-minute chart and what to expect today
- Emini is down 2 points in the overnight Globex session.
- Since yesterday’s close, the Globex market has been going sideways in a trading range.
- The bears got a downside breakout during the 5:30 AM PT report bar; however, the market reversed up, and the bear breakout failed. Then moved lower again.
- Traders should be open to a possible bull trend day and a close above the open due to the reason stated above regarding the daily chart.
- As always, traders should expect a trading range open and the market to go sideways on the open. Traders should consider not trading for the first 6-12 bars unless they are comfortable with a limit order market.
- The open can form big breakout bars that often fail, so it is essential to be cautious. It is easy to get trapped in the open and take a big loss making it difficult to recover before the end of the day.
- Since most of the time, the market goes sideways for the first hour, traders will often not miss anything if they are patient and wait.
- Traders can also wait for a credible stop entry in the form of a double top/bottom or a wedge top/bottom.
- Since today is Friday, traders should be mindful of the possibility of a surprise breakout up or down late in the day as institutions decide the fate of the weekly chart.
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 much more detailed explanation of the swing trades for each day (see Online Course/BTC Daily Setups).
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 exits. Those who exit prefer to get out with a small profit (scalp) but often have to exit with a slight 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.
