S&P 500 Emini Reversal Up From Test of 5,500 Round Number

S&P Emini Pre-Open Market Analysis

• The market is reversing up during the early morning hours, after a test of the 5,500-round number
• Yesterday, a bad follow-through bar for the bears was formed following last Friday’s outside down bar.
• Yesterday’s bar is a weak stop entry buy, which increases the odds of sellers above and a second leg down. This is why the overnight session sold off.

What to Expect Today

• The Globex market sold off overnight hours and recently tested within 10 points of the 5,500 round number.
• The bulls are hopeful that today will form an early low of the day and become a strong bull trend day.
• Because of the support and strong reversal up just before the open, if today is going to be a trend day, it will probably be a bull trend day.
• As always, traders should expect today to have a lot of trading range price action on the open.
• Most traders should wait for 6-12 bars before placing a trade. By waiting, a trader gains clarity on the day structure and a better chance of catching the high or low of the day.
• By bar 6, there is often a 50% chance that a trader has seen either the high or low of the day.

Yesterday’s Emini Setups

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.