Emini Bull Breakout of Bear Flag

Trading Update: Monday May 6, 2024

S&P Emini pre-open market analysis

Emini daily chart

• The Emini broke above the 20-period moving average last Friday. However, the bulls failed to get a strong close above the moving average.
• The bulls are hopeful that today will close far above last Friday’s high, creating trapped traders and a successful bull breakout of a bear flag.
• The bulls are hopeful that this is the start of a bull breakout above the April bear flag (April 19^th low to the April 29^th high).
• Next, the bulls want a measured move up to near 5,300.
• The bears want the breakout above the April 29^th high to fail and lead to a reversal back down and a test of the April low.

Emini 5-minute chart and what to expect today

• The Globex market formed a tight trading range for most of the overnight session and rallied during the early morning hours.
• The bulls are hopeful that today will continue the bull-trending behavior from the past few days.
• However, today, there will likely be a lot of trading range price action.
• As always, traders should assume that the first hours will have a lot of trading range price action. This means traders should consider waiting for 6-12 bars before placing a trade.  
• There is a 20% chance of a trend from the open and an 80% chance of a trading range open. This means there is an 80% chance of the market forming a double top/bottom or a wedge top/bottom during the first two hours.
• It is common for the market to create an opening swing that begins before the end of the second hour after the formation of one of these patterns mentioned above.
• The opening swing typically lasts two legs and two hours and can provide great risk-reward with decent probability.
• Traders should pay attention to last Friday’s high, as it will likely be a magnet today. The bulls want to close far above it, and the bears want to close below it.
• The open of the day will likely be another important magnet.

Emini Intra-Day Update

• The Emini formed a trend from the open bull trend. However, bar 1 is a bad buy signal bar. This increases the odds that there are sellers above bar 1 and that the market will retest the bar 1 high.
• The bulls are hopeful that bars 2-4 are strong enough to create a successful bull trend from the open after the gap up.
• As of bar 9, it looks like the current bull trend from the open will evolve into a trading range and test down to bar 1 high.
• The bears are hopeful that the market will form an opening reversal back down to last Friday’s high, which is a magnet.
• Because the market is gapped up on the open, the bulls are hopeful that they will be able to create a bull trend day.
• While the bulls have done a good job with the buying pressure and created a gap between bar 1 high and bar 6 low, the selling pressure is increasing. This increases the risk that the opening gap at bar 1 high will close.
• If today is clearly going to become a small pullback bull trend day, the bulls need to create more opening gaps and further trap the scale-in bears.
• Bar 19 is attempting to break below the moving average after forming a wedge bottom (4,8, and 15). The bears need a strong close below the moving average and, ideally, 2-3 bars closing below it. Probably will test back to the open of day and possibly last Friday’s high. Bears need follow-through after bar 19.
• Bar 20, bears failed to create follow-through, and instead, bulls formed a strong reversal bar. Bulls want 2^nd leg up after bar 20.
• The market is going sideways at the moving average (bar 24). The bulls want trend resumption up, and a second leg up after the gap up on the open. The bears want a successful breakout of the moving average and a test of the bar 1 lone.
• Bar 27, bulls trying to get the upside breakout above the Bar 15 high. We have not gone above the 18 bar range so will probably go at least 1 tick above bar 15.

Friday’s Emini setups

Al created the SP500 Emini charts.

Here are reasonable stop entry setups from Friday. 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 in inside bar last Thursday, and the bulls broke above it on the following day.
• While the bulls did a good job getting the upside breakout, the breakout bar closed below its midpoint which is disappointing for the bulls.
• The bulls are trying to get another follow-through bar today. They are hopeful that today will close beyond las Friday’s high.
• However, today will likely not close beyond last Friday’s high.

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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