Trading Update: Wednesday June 26, 2024
S&P Emini pre-open market analysis
Emini daily chart
- The daily chart formed a second entry buy yesterday, after Monday’s outside down bar.
- While this is good for the bulls, the signal bar is weak with bad context. This increases the odds of sellers above.
- The bears are hopeful that they will be able to form a downside breakout below yesterday’s second entry buy.
- This would potentially create a bear breakout below a bull flag and increase the risk of a measured move down (June 20th High to June 24th low).
- More likely, any breakout below the June 204th low will be limited, and the market will probably find buyers below or near the moving average.
- The bears are doing a good job at increasing the selling pressure. This increases the odds of the daily chart transitioning into a trading range.
- Next, the bears need to begin to form closes below the moving average as a way to demonstrate strength.
- Because the channel up is tight, the bears will likely need a credible major trend reversal. This means that any selloff to the moving average will likely be a minor reversal, and the market will have to test back up to the highs.
Emini 5-minute chart and what to expect today
- The Globex market rallied until the early morning hours. The market formed a buy climax around 4:00 AM EST, likely leading to exhaustion and a test of the bottom of the buy climax (3:15 AM).
- The bears have formed a strong selloff ever since.
- The market is going to gap down; therefore, the odds favor a second leg down on the open.
- The selloff is getting climactic, which increases the odds of a pullback soon.
- The bulls hope they will get a strong reversal up during the U.S. Session and trigger the second entry buy on the daily chart.
- The highest probability outcome on the open is a trading range. In general, there is an 80% chance of a trading range open and only a 20% chance of a trend from the open, up, or down.
- Most traders will be better off waiting for 6-12 bars before placing a trade unless they can make quick decisions. It is common for breakouts to be minor and lead to small 2nd legs before they fail. This means that traders must be quick to exit trades, especially on the open, if the trade is not doing what is expected.
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.
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.
