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Emini Bulls Want Breakout above High 1

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Trading Update: Monday May 20, 2024

S&P Emini pre-open market analysis

Emini daily chart

  • The Emini found buyers below last Thursday’s low and formed a High 1 buy signal bar on Friday.
  • The rally to the May 15th breakout bar is becoming climactic and increases the odds of sideways trading.
  • High 1 buy signal bars often lead to sellers above, followed by trend resumption. This is because most pullbacks have 2-3 legs.
  • High 1 signal bars that form early in a strong breakout often lead to immediate trend resumption.
  • Because Friday’s high 1 buy signal bar has a small body with a prominent tail and is far from the moving average, there is an added risk of sellers above.
  • The bears are hopeful today will form a 2nd entry bear reversal bar closing on its low. Next, the bears will want a strong reversal down and a test of the moving average.
  • The bulls want the opposite. They want a strong entry bar above last Friday’s high 1 buy signal bar. This would trap bears into a bad short and bulls out of a good long above last Friday’s high.
  • The odds favor the market going sideways over the next couple of days and the market getting closer to the moving average.
  • The downside is likely limited, and buyers are probably below scaling in lower due to the channel up being tight.
  • Every bar added to the daily chart will drag the moving average up. This means the market does not have to sell off to reach the moving average. The Emini can go sideways for weeks, which would drag the moving average up closer to the current price level.

Emini 5-minute chart and what to expect today

  • The Emini is going to form a small gap.
  • Traders should assume that the market will have a lot of trading range price action on the open.
  • This means that most traders should consider waiting for 6-12 bars before lacing a trade unless they can make quick decisions.
  • Most traders should try to catch the opening swing that begins before the end of the second hour, after forming a double top/bottom or a wedge top/bottom.
  • Traders can also wait for a clear breakout with follow-through before placing a trade and betting on a second leg.
  • Traders should pay attention to Friday’s high as it is a high 1 buy signal bar on the daily chart.
  • The bulls want a bull trend day closing on its high. This would create a strong entry bar for the bulls on the daily chart.

Friday’s Emini setups

SP500 Emini 5-Min Chart Trading Range Then Failed Bear Breakout

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 triggered last Friday’s High 1 buy signal bar today and found sellers above.
  • Today closed as a bear reversal bar, creating a second entry sell for the bears.
  • The bulls want a failed breakout below today’s low (5/20) and a reversal up. This would create a second entry buy signal bar.
  • Even If the market pulls back for a few legs and gets closer to the moving average, the odds still favor a second leg up after the May 15th bull breakout.
  • The bears need follow-through selling below today’s bear reversal bar.
  • At a minimum, they need a strong break bar closing on its low, or 3-4 average-size bars to convince traders that the market is becoming Always In Short.
  • The market may have to test closer to the May 15th low, where it will probably find support.
  • The bears are hopeful that the rally up to the May 16th high is a parabolic wedge top that will lead to a bear reversal bar.
  • Overall, the odds favor a second leg up above the May 16th high. This means that any reversal down will likely be minor and find buyers below.

Summary of today’s S&P Emini price action

SP500 Emini 5-Min Chart Failed Breakout above Wedge Top

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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