Emini Testing 5,800 Round Number

Trading Update: Tuesday September 24, 2024

End of day video review

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S&P Emini market analysis

Emini daily chart

• The Emini formed a third doji bar on the daily chart, near the 5,800 round number. This is a likely area of resistance and increases the odds of a pullback soon.
• The bears want a reversal down from last Friday’s week’s High 1 buy signal bar.
• Last Thursday, the 5,800 was tested, and it came within 3 points of the round number. This is a close enough test that the market was likely to find sellers.
• It is common for the market to be within 5 points of important round numbers that have never been tested or are rarely tested and pull back before going beyond the round number.
• At the moment, the odds favor a test above the 5,800 round number. However, the market may pull back before the bulls can get above the round number.
• The bears want a strong reversal down with strong follow-through. They hope the market will form a double top with the July high and the market breaks below the neckline, the August low.
• More likely, any selloff that the bears create will be limited, and the market will go sideways.
• Because of the selling pressure down to the September low, the odds favor a test down to the September 11^th price level. It does not have to reach it; however, it will probably test near it, allowing the trapped bears to avoid a loss.
• Overall, the bears will try to prevent the bulls from getting a strong bull close on the daily chart.
• The weekly chart formed a follow-through bar last week with a tail above the bar. The context for the bulls is not ideal. This increases the odds that this week will form a bear bar on the weekly chart and close below the open.
• A weekly chart is typically made up of five trading days. If 40% of the current bar on the weekly chart is disappointing, that will increase the odds of bulls selling out of longs.
• This means that if today is not a strong bull bar, 40% of the week will be disappointing for the bulls, and it will increase the odds that we could get a selloff going into the close of the week, creating a bear bar on the weekly chart.

Emini 5-minute chart and what to expect today

• The Bears formed a bear trend from the open down to bar 7.
• While the selloff down to bar 7 was strong by the bears, bar 7 is a climatic bar relative to the bars to the left. This increases the bar, and the market goes sideways and tests up to the bar 7 high.
• As of bar 12, a bear trend or trading range day is most likely and not a bull trend day.
• The bears want a close near its low, which would create a 2^nd entry sell on the daily chart.
• While bar 7 was climactic, it was still a strong breakout bar. This means that the odds favor a test of the bar 7 low at some point today.
• The market is Always In Short with the opening selloff, which increases the odds of lower prices.

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.

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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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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