S&P 500 E-Mini: Test of February 23 High in the Cards

S&P Emini pre-open market analysis

Emini daily chart

o    The formed an Inside bar yesterday after Tuesday’s weak High 1 buy signal bar. This is trading range price action and increases the odds of sideways to up and a test of the February 23^rd high.

o    While this is disappointing for the bulls, the odds favor sideways to up trading, compared to a strong downside breakout.

o    The bears are hopeful that they will be able to get a test down to the moving average. However, the follow-through selling ever since the February 23^rd high has been disappointing. This will increase the odds of buying below as traders begin to buy.

Emini 5-minute chart and what to expect today

o    Emini is up 17 points in the overnight Globex session.

o    The Emini rallied during the morning report released at 8:30 AM EST.

o    Today will gap up above yesterday’s high and trigger a high 1 buy signal.

o    Because the gap up is large, the odds favor at least a small second leg up on the open. However, the market may have to go sideways first and test closer to the moving average.

o    Because the gap up is large and closing above many bars to the left, there is an increased risk of a trend day. If the market is going to get a trend, it is more likely to be a bull trend due to the gap up.

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.