Emini Follow-through after High 1

Trading Update: Friday May 10, 2024

S&P Emini pre-open market analysis

Emini daily chart

• The Emini formed a strong entry bar following Wednesday’s High 1 buy signal bar. This is good follow-through and increases the odds of higher prices even if there is a pullback fist.
• High 1 buy signal bars often lead to a pullback, followed by trend resumption. This means that yesterday trapped into a bad short above Wednesday’s high, and bull’s out of a good long position.
• This increases the risk that the market will test Wednesday’s high in the next day or two.
• The bull is hopeful that today will form another bull trend bar, which would further increase the odds of higher prices.
• The market is getting near the measured move target (5,317) based on the bull breakout of the bear flag (April 19^th low to April 29^th high).
• The bears do not mind the rally up to 5,300 as long as the market goes sideways and increases selling pressure.
• The bears will see any rally as a potential major trend reversal setup. Next, the bear will want a strong downside breakout below the April 19^th neckline and a measured move down to the January low.
• Most major trend reversals are minor reversals that transition the market into a trading range. This means the odds favor a trading range and not a major reversal in a bear trend.
• The bulls hope the market will form another small pullback rally, leading to a breakout above the all-time high.
• The Bulls want to keep the April 29^th breakout point high open as a sign of bullish strength. The odds favor the market retesting the April 29^th breakout point and closing it.
• Breakout points are close in trading ranges, and traders believe that the current rally is a bull leg in a trading range. This means the odds favor the April 20th high getting tested, even if the market first reaches the 5,300 round number.

Emini 5-minute chart and what to expect today

• Emini is up 15 points in the overnight Globex session.
• The Globex market formed a tight trading range for several hours on the 15-minute chart and formed an upside breakout during the early morning hours.
• The 15-minute Globex chart has been above the moving average several bars and recently formed a bear bar completely below the moving average, closing on its low. This is a sign that the market is transitioning into a trading range.
• At the moment, the Globex range is only 18 points, and the range will likely double during the U.S. Session.
• There have only been 2 days out of 22 days with a Globex range (Including U.S. Session) of less than 40 points.
• Traders should pay attention to Wednesday’s high as it will likely be a magnet, and the market may try and reach it over the next few days.
• As always, traders should expect a lot of trading range price action on the open. This means that traders should consider waiting for 6-12 bars before placing a trade unless they can use wide stops and make quick decisions.
• Most traders should try to catch the opening swing that often begins before the end of the second hour after the formation of a double top/bottom or a wedge top/bottom.
• The reason traders should try to catch the opening swing is because the market often forms one more than 80% of the time, and it often lasts for two hours and two legs. There is also at least a 40% chance that the opening range will more than double during the opening swing.
• Today is Friday, so weekly support and resistance are important. Traders should be ready for a surprise breakout late in the day as traders decide on the close of the weekly chart.
• The most important thing on the open is to be patient and not in a rush. The longer one waits to place a trade on the open, the more clarity one will gain in regard to the structure of the day.
• There is an 80% chance of a trading range open and only a 20% chance of a trend from the open.

Emini Intra-Day Update

• The Emini gapped up on the open and formed a trend from the open.
• The bulls have four consecutive bull bars. However, 3 out of the 4 have tails above the bars. This increases the odds of a trading range open and the market falling below the bar 1 low.
• The bulls are hopeful that today is a trend from the open that will lead to a strong bull trend day; the overlapping bars during the first 4 bars of the day are a warning that a trading range will transition soon. The bears want to test down to yesterday’s high and close the gap.
• The odds favor a trading range open. If today is going to become a strong trend, day up or down, there will be plenty of time to enter once the trend is clearly underway.
• The Bears got a surprise breakout on bar 7, which was strong enough for a 2^nd leg down.
• The market sold off to bar 12, forming a parabolic wedge bottom at yesterday’s high.
• The bulls are hopeful that bar 14 is the start of a successful bull reversal and low of the day.
• The problem that the bulls have is that the selloff down to the 14 low is in a microchannel. This increases the odds that the first reversal up will be minor and lead to a trading range, and not the start of a bull trend.
• The 60-minute chart closed as a strong bear reversal bar. This increases the odds that there will be a second leg down.
• Bar 13 triggered the sell below the 60-minute reversal bar and found buyers. However, there are probably sellers near the midpoint of the 60-minute bar (5,253.5). Traders should expect a test of the bar 13 low at some point today. The bulls will try their best to prevent the market from relieving the trapped bears; however, the odds are against it.
• Because of the selloff during the first 12 bars, today will likely be a bear trend or a trading range day and not a bull trend day.
• Bar 17 is the retest of the Bar 13 low and it went far below it. The bears are trying to get a strong entry bar on the 60-minute chart after the first hours close on low.

Yesterday’s Emini setups

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.

Summary of today’s S&P Emini price action

Al created the SP500 Emini charts.

End of day video review

End Of Day Review will be presented in the Trading Room today. See below for details on how to sign up.

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

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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.

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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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