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Emini Risk Getting Big for Bulls

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Trading Update: Monday November 20, 2023

S&P Emini pre-open market analysis

Emini daily chart

  • The Emini has been in a strong rally since the start of November. The bulls expect the price to reach the September 1st high, which is the start of the bear channel that ended in late October. The risk is getting big for the bulls which increases the odds of a pullback.
  • The current rally is climactic and far from the moving average. This increases the odds that the market will pull back soon and may have to reach the moving average before bulls are willing to buy again.            
  • The stop for the bulls is at the November 9th low or the October 27th low. This means that the risk for the bulls is getting big and the risk-reward is getting worse.
  • Institutions have risk management rules and must begin reducing their risk exposure. They can reduce their risk by selling part of their long position or using a tighter stop.
  • The problem with a stop below November 11th is that the market will probably fall below this price level. This increases the risk of bulls selling out of longs and looking to buy lower, below the November 9th low.
  • The bears know the risk is getting big for the bulls and some will begin to scale into short betting on a bull leg in an overall trading range. The rally is a small pullback bull trend within a trading range. This makes scaling into shorts dangerous, and most bears are better off waiting for more signs of bearish strength.
  • The odds favor buyers below and scaling in lower. This means that the first reversal down will probably fail.
  • If bulls are buying and willing to scale in lower, most will use a stop below the October 27th low instead of the November 9th low.
  • The problem with the November 9th low is that this is just above a 50% pullback of the November rally. In trading ranges 50% pullbacks are very common. This means that putting a stop below the November 9th low is probably a skunk stop. A skunk in the middle of the road is bound to get killed. This is no different than a protective stop between two logical stop locations. This means that traders who put their stop at the November 9th low will be selling out of longs right where other bulls will begin to establish long positions.
  • Most bulls are probably better off exiting below a bear bar closing on its low, 2-3 average bear bars of trusting their stop below the October 27th low.

Emini 5-minute chart and what to expect today

  • Emini is up 4 points in the overnight Globex session.
  • The Emini will open with almost no gap on opening the U.S. Session.
  • This will increase the odds of the open having a lot of trading range price action.
  • As I often say, most traders should consider waiting for 6-12 bars before placing a trade unless they are comfortable trading with wide stops and limit orders.
  • Most traders should try and 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.
  • Since this week is Thanksgiving, traders must maintain their discipline with trading. This is an added risk of a lot of sideways trading, and traders must remember to trade the chart in front of them and not what one hopes the market is going to do.
  • The bulls want continued follow-through buying after last Thursday’s high 1 buy signal bar. Today will likely disappoint the bulls and have a lot of trading range price action. This means the odds are against a strong bull trend day today.
  • Traders should continue to pay attention to the open of the day as well as last Friday’s high. Both will likely be important magnets today.

Emini intraday market update

  • The Emini rallied for the first 3 bars of the day, testing the high of last week.
  • The bulls have a trend from the open bull trend. However, it is within the context of a broad bull channel. This will lower the probability of today becoming a bull trend day and increase the odds of a trading range day.
  • The low of the day is probably in for the next couple of hours and possibly the rest of the day. However, there is plenty of time for the bears to develop enough selling pressure to return to the day’s open. If the bears are going to get a reversal down, they will need to develop more selling pressure first.

Friday’s Emini setups

SP500 Emini 5-Min Chart Bull Trending Trading Range Day

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

EURUSD Daily: Testing August 30th High
  • The EURUSD formed a strong bull breakout on November 14th that is currently getting a second leg up.
  • The odds favored a test of the prior lower highs in the bear channel on the daily chart that began in July.
  • the EURUSD is the August 30th major lower high and may begin to go sideways soon at this price level.
  • Bulls expect a measured move-up of the November 14th bull breakout. This means the odds favor higher prices even if the market pulls back first.

Summary of today’s S&P Emini price action

SP500 Emini 5 Min Chart Small Pullback Bull Trend From The Open

Al created the SP500 Emini charts.

End of day video review

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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