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Emini Buyers below Yesterday’s Outside Down Bar

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Trading Update: Wednesday March 27, 2024

End of day video review

** No audio for first 3 minutes!! Will fix after YouTube gives edit access to recording.

S&P Emini pre-open market analysis

Emini daily chart

  • The Emini went outside down yesterday after getting a strong downside breakout late in the session. This increases the odds of buyers below yesterday’s low.
  • The Emini is getting near the March 8th breakout point high. This price level will probably act as support and lead to sideways trading for a day or two.
  • The bears are hopeful that yesterday will have follow-through selling today. However, it is more likely that the bears will be disappointed today.
  • Outside bars are expanding triangles on a smaller time frame. Trading range bars are very context-dependent.
  • Because the market is Always In Long and near March 8th breakout point high, there are probably buyers below yesterday’s low.
  • The bears need to get closes below the March 8th breakout point in order for trader to conclude that the daily chart is transitioning into a trading range.
  • The daily chart has several open gaps since the channel began in January 2024.
  • Open gaps indicate a small pullback bull trend and increase the risk of higher prices.
  • Once the bears can get a breakout point to close, they will try to get a close below the most recent major higher low to end the argument of a bull trend.
  • Overall, the bears have a long way to go before traders conclude they are in control. Small pullback trends are breakouts on higher time frames. This means the best the bears can expect is a trading range and not a bear trend on the daily chart.

Emini 5-minute chart and what to expect today

  • Emini is up 26 points in the overnight Globex session.
  • The Globex market has been in a bull rally since yesterday’s late selloff during the U.S. Session.
  • When you get a strong selloff, there are always option writing institutions who sell puts. These puts quickly begin to lose money, so these institutions short the underlying to reduce their loss on the puts.
  • Once the loss on the puts is acceptable, institutions begin to buy back their positions, which reduces the selling pressure.
  • In general, when you get a selloff late in the day, you must always consider the risk of traders buying after the selloff. This is due to option writing firms and because the market is in a bull trend on the higher time frames.
  • The Emini will gap up on the open, increasing the odds of a second leg-up during the first 1-2 hours.
  • Traders should expect a lot of trading range price action on the open. This means most traders should be patient on the open and consider not placing a trader for the first 6 – 12 bars.
  • Most traders should focus on the open swing that often begins before the end of the second hour. It is typical for the opening swing to start after forming a double top/bottom or a wedge top/bottom. This means a trader can often wait for the market to form one of these above patterns before placing a trade.
  • Traders should pay attention to the March 8th breakout point (5,256.5).  Because the market is likely to gap up, it will probably not reach it. However, it is a reasonable magnet for the market to test over the next few days.
  • Because yesterday was climactic, there is a 75%  chance of a trading range beginning before the end of the second hour and lasting for two hours.

Emini Intra-Day Update

  • The Emini gapped up on the open and broke to the downside during bars 5 – 7.
  • The selloff is strong enough to expect at least a small second leg down.
  • The bulls are hopeful that the selloff down to bar 7 will lead to a higher low and find buyers around yesterday’s close.
  • Because of the selloff down to bar 7, the market is Always In Short, and the odds favor a second leg down.
  • The bears want to get down to yesterday’s low and the March 8th breakout point high (5,256.5).
  • Traders should assume that today will either be a bear trend or a trading range day. The selloff to bar 7 lowers the odds of a bull-trend day.

Yesterday’s Emini setups

SP500 Emini 5-Min Chart DT Then Weak Bear Channel and Late Bear BO

Al created the SP500 Emini charts.

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 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.

EURUSD Forex market trading strategies

EURUSD Forex daily chart

  • The Bears have a Low 1 short below yesterday’s low.
  • Low 1’s generally have buyers below and lead to deeper pullbacks, which is probably what will happen here.
  • However, last week’s consecutive bear breakout bars increase the risk that there might be more sellers below yesterday’s Low 1.
  • This means that if today is a strong bear trend bar closing on its low, that would trap limit order bulls fading from yesterday’s Low 1.
  • Last week’s breakout is strong enough for a second leg down. However, there are disappointed bears who sold the March 22nd close. Some of those bears will buy back shorts on today’s retest of the March 22nd close.
  • The bulls know this, and they will establish longs rights when buyers buy back shorts.
  • Overall, there are probably more buyers who blow yesterday’s low, and the market will probably pull back for a few days. The lower probability outcome for today would be a strong entry bar for yesterday’s low 1, trapping the limit order bulls.

Summary of today’s S&P Emini price action

SP500 Emini 5-Min Chart DT Then Sell Climax and Wedge Bottom

Al created the SP500 Emini charts.

See the weekly update for a discussion of the price action on the weekly chart and for what to expect going into next week.

Trading Room

Al Brooks and other presenters talk about the detailed Emini price action real-time each day in the BrooksPriceAction.com trading room days. We offer a 2 day free trial.

Charts use Pacific Time

When times are mentioned, it is USA Pacific Time. The Emini day session charts begin at 6:30 am PT and end at 1:15 pm PT which is 15 minutes after the NYSE closes. You can read background information on the market reports on the Market Update page.

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