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Emini at the 5,300 Round Number

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Trading Update: Wednesday May 15, 2024

S&P Emini pre-open market analysis

Emini daily chart

  • The Globex market reached the 5,300 round number recently during the 8:30 AM EST report bar.
  • The 5,300 round number was a logical round number for the market, and several magnets were near the round number.
  • The Bulls formed an upside breakout of the bear flag (April 19th low to the April 29th high) and measured move projects up to near 5,317.
  • The daily chart has been in a tight bull channel since January of this year. The bears formed a strong trend line break down to the April low, which was a 50% pullback of the bull channel that began in January.
  • The selloff down to the April low was likely to be a minor reversal, and the bears would need to form a major trend reversal if they were going to get a sustained selloff.
  • This means that a retest of the highs is likely. At a minimum, traders would need to see a retest of the upper 1/3rd of the range from the March high to the April low. This means, at a minimum, the market was likely to test 5,200.
  • Once the Bulls formed the May 6th bull breakout bar, the odds favored a measured move of the April 29th bull breakout of the bear flag.
  • While the market is at the 5,300 magnets, the bears do not have enough selling pressure for a credible stop entry short.
  • The bears need to create more selling pressure, or the odds will favor higher prices.
  • The next major target for the bulls is the March high. Since the May rally is in a tight bull channel, the odds favor the test of the March high. However, the market is also in a trading range. This means that the market may stall just under the March high. If it does this, that would be a sign that the rally is a buy vacuum test of resistance, the May high. This would increase the odds of trading range price action.
  • Overall, the first reversal is likely going to be minor, and the market will have to go sideways for several bars before the bears have a credible sell.

Emini 5-minute chart and what to expect today

  • Emini is up 24 points in the overnight Globex session.
  • The Globex market went sideways for most of the overnight session. The bulls recently formed a strong upside breakout during the 8:30 AM EST report bar, likely a buy vacuum test of the 5,300 round number.
  • Today is going to gap up on the open. The bulls expect the gap up to lead to a second leg up during the U.S. Session. This means that sideways to up is most likely during the first 1-2 hours.
  • When a chart has a gap, it is a breakout. Since breakouts typically get a second leg up, this means that when a gap is present on a chart, a trader should expect an attempt at a second leg up unless it is more likely to be exhaustion.
  • As I often say, traders should expect a trading range open and for the market to have a lot of sideways trading. Traders should consider waiting for 6-12 bars unless they can make quick decisions.
  • In general, there is an 80% chance of a trading range open and only 20% of a trend from the open. This means that traders should expect a trading range on the open.
  • There is at least an 80% chance of an opening swing trade to begin before the end of the second hour.
  • Since the market often forms a double top/bottom or a wedge top/bottom on the open, the trader can wait for one of the patterns mentioned above to develop before entering a stop to catch the opening swing.
  • The swing trade is important because it often lasts two legs and two hours, providing a great risk-reward trade with decent probability.

Emini Intra-Day Update

  • The Emini gapped up on the open, and bar 1 formed a bull bar closing on its high.
  • Bar 1 is a sign that the market is accepting the gap up and will likely find buyers below.
  • There is only a 20% chance of bar 1 being either the high or low of the day; therefore, it was expected to see sellers above bar 1.
  • The bears formed a 4-bar bear microchannel with three decent bear bars, closing below their midpoints. While this was good for the bears, it forced traders to sell at the moving average, which is not where traders should be selling after the market formed a large gap.
  • The moving average is a reflection of the fair price. The market gapped up far above the fair price (moving average). Therefore, traders were likely eager to buy anywhere close to the moving average.
  • Bears who sold above bar 6 got trapped during bar 7, which increases the odds of a second leg up and test back to the bar 3 high.
  • As for bar 12, the bulls are hopeful that the rally from bar 6 is strong enough to form the day’s low. Next, the bulls are hopeful that the market will rally for a measured move of the opening range and create a bull trend day.
  • The day still has several hours left, and as bullish as today looks, the odds still favor a trading range day. This means that today, it will probably not close on its high.
  • Traders will want to see how the market breaks out above the bar 3 high. The stronger the breakout, the more trapped traders; therefore, the greater the probability of a measured move up.
  • Traders should continue to monitor the 5,300 round number, as it will likely be an important magnet for most of the day.

Yesterday’s Emini setups

SP500 Emini 5-Min Chart Wedge Top Failed Then Trading Range

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 EURUSD formed a strong bull breakout bar on today’s daily chart (May 15th).
  • Today is likely a give-up bar that is strong enough to get a second leg up. This means that there are likely buyers below.
  • The bears hope this is just a buy vacuum test of resistance, the April 9th high. However, the market will likely break above it and form a second leg up.
  • The daily chart is Always In Long; therefore, the odds favor higher prices.
  • Traders will pay close attention to see what kind of follow-through buying the bulls can create tomorrow.
  • The bears will try to prevent the bulls from getting their follow-through.
  • If the bears will trap the bulls and get a strong reversal down, they will need to increase the selling pressure first. Otherwise, the odds will favor buyers below and a second leg up.
  • The next target for the bull is a test of the March 8th high and the 1.1000 round number.
  • Overall, traders should expect sideways to up in the next few days, and the downside will likely be limited.

Summary of today’s S&P Emini price action

SP500 Emini 5-Min Chart Bear Trap Then Small Pullback Bull Trend

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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