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Emini Strong Bear Breakout

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Trading Update: Friday November 1, 2024

S&P Emini market analysis

Emini daily chart

  • The Emini formed a strong bear breakout, closing far below yesterday’s moving average.
  • Yesterday is a strong enough downside breakout that the odds favor a second leg.
  • The bears formed a bear breakout below the bull flag (October 17th high and October 23rd low).
  • While the bears have a strong bear breakout, it will become a higher probability short if they create a strong follow-through bar.
  • Even if today is a bull reversal bar, there are probably sellers above. This will increase the probability of a second leg down.
  • The bears managed to close the October 26th breakout point high. This is a sign that the market is evolving into a trading range.
  • Traders will pay close attention to what kind of follow-through bar today will be.
  • Because the market is in a trading range, today will probably form a disappointment bar for the bears.
  • Overall, yesterday was a strong enough bear surprise breakout that the odds for a second leg down.

Emini 5-minute chart and what to expect today

  • The U.S. Session is going to gap up to the upper 1/3rd of the trading range high (Yesterday’s bar 76).
  • Today will probably have a lot of trading range price action. This means traders should consider not trading for the first 6-12 bars. Unless they can make quick decisions.
  • There is an 80% chance of a trading range open and only a 20% chance of a trend from the open up or down.
  • All trading ranges form either a double top/bottom or a wedge top/bottom. This means there is an 80% chance of one of the abovementioned patterns to form.
  • Most opens have an opening swing that typically begins before the end of the second hour.
  • Traders should try and catch the opening swing. One way to do this is to wait for a trading range to form and enter one of the patterns mentioned above.
  • Today is Friday, which means that the weekly chart is important. This increases the risk of a surprise breakout late in the day as traders decide on the close of the weekly chart.

Yesterday’s Emini setups

SP500 Emini 5-Min Chart Bear Trend From Open and Then Trading Range

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.

Emini end of day video review

Periodic end of day review videos will be moved to top of page when done.

EURUSD Forex market analysis

EURUSD Forex daily chart

  • The EURUSD formed a strong bull bar at the daily moving average. While this is good for the bulls, it forces traders to buy right at the important resistance, the moving average.
  • Yesterday’s bar spent much time as a weak doji bar and rallied during yesterday’s afternoon hours. The follow-through bar yesterday also overlaps with Wednesday’s bull breakout bar. This increases the odds of disappointment, which is why we are getting a bear reversal bar today.
  • If today closes on its low, it will be enough of a reason for bulls to consider exiting below it; however, it is a 4-bar bull micro channel, which will lower the probability of the bears selling.
  • The bears will seen today as a second entry sale, with October 25th as the first entry.
  • Overall, the current rally is likely a minor reversal up. This means that the market may have to test down to the October low and form a double bottom before traders can make a more credible reversal up.

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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