Emini Bears Want Bear Flag

Trading Update: Thursday April 25, 2024

S&P Emini pre-open market analysis

Emini daily chart

• The Emini formed a bull breakout on April 23^rd. However, the bar is small and overlaps several bear bars. The bears are hopeful that any rally will become a bear flag and lead to a breakout below 5,000.
• The odds are low that the bulls will get a strong reversal up after the test of 5,000 without the market forming a trading range first.
• Yesterday was a weak follow-through bar after the April 23^rd breakout.
• While the rally over the past three days was disappointing for the bears, the odds favored a retested of the low close. \
• The bears want a downside breakout, triggering a Low 1. Next, they want the downside breakout to be strong, trapping bears out of a winning trade and trapping bulls into a winning trade.
• More likely, any selloff we get will find support near 5,000, and the market will continue to go sideways.

Emini 5-minute chart and what to expect today

• The Overnight Globex market went sideways for most of the session.
• The bears formed a downside breakout late in the day, and they are hopeful that the open will form the second leg.
• The market is going to gap down, which increases the odds of a second leg down.
• Because the daily chart is likely to have sellers above and near the moving average, today has the potential to be a bear trend and test back down to 5,000.
• While a trend day is possible, traders can wait for the market to show signs of trending behavior before betting on the trend.
• Most traders should wait 6-12 bars before placing a trade unless they are able to make quick decisions. This is because most opens lead to trading ranges.
• Traders should pay attention to the open of the week 5,030.25 as that will likely be an important magnet since the market is near it. Traders should also pay attention to the 5,000 round number as well.

Intra Day Update:

• The bears formed a second entry short with bar 4 closing on its low.
• As of bar 6, the market is Always In Short, and the bears want a trend from the open.
• 60% chance if we do get a trend from the open, it will form a trading range and not last all day.
• Because of the gap down, if today is going to be a trend day, the odds slightly favor the bears.
• Traders should continue to monitor the 5,000 round number as the market may try to reach it today.
• While the bears are hopeful for a trend from the open, more likely, the current sallow (bar 7) is a leg in a trading range.
• The rally to bar 12 confirmed that the market is forming an expanding triangle. The bulls want a second leg up, and the deep pullback (bar 15) was expected.
• Trading range most likely, the bulls need to break far above the moving average to convince traders that the market is in a bull trend.
• While the rally to bar 12 is likely to get a second leg up, a trading range is more likely than a bull trend. This increases the risk of a deeper pullback than what the bulls want. Possibly below the Bar 7 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.

EURUSD Forex market trading strategies

EURUSD Forex daily chart

• The Bears formed a Low 2 at the moving average yesterday. However, yesterday’s Low 2 is a doji and a bad sell signal bar. This increased the odds of buyers below yesterday’s low.
• The bulls are hopeful today will form a strong bull breakout above the moving average and a successful bull breakout of the bull flag.
• More likely, the bulls will be disappointed with today’s upside breakout.
• Traders will pay close attention to see how determined the bulls are to get an upside breakout. If it is weak, sideways will be more likely.
• The bulls managed to reach the April 2^nd breakout point low allowing trapped limit order bulls to exit.
• It is still possible that the April 2^nd breakout point low becomes a negative gap. It would be better for the Bulls if they can get a strong close above the April 2^nd low, increasing the odds of a second leg trap and a reversal up.

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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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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