Emini Bears Want Break below March 22 High

Trading Update: Thursday May 4, 2023

S&P Emini pre-open market analysis

Emini daily chart

• The Emini formed a strong bear bar closing on its low yesterday.
• Bears want break below March 22^nd high and test of April 26^th low with close below the March 22^nd high. This would close the breakout point and end the argument of a measured move from the March 13^th low to the March 22^nd high.
• The next target for the bears is a test of the 4,000 big round number.
• The past two trading days increase the probability of the market going slightly lower, reaching the April 26^th low.
• The bulls want the rally (Tuesday’s low to yesterday’s high) to disappoint the bears enough that the market will form a micro double bottom and rally back to the May 1^st high.
• There were bulls who bought the May 1^st low and scaled in lower during Tuesday’s selloff. Those bulls were disappointed enough that many used the rally late Tuesday to Wednesday’s high to exit their trade breakeven, or with a small profit after their scale in traders. Most of those bulls probably bought more at the April 26^th low.
• There were bears who sold the April 26^th low and were disappointed by last week’s rally. Most of those bears sold higher and were happy to buy back shorts at the April 26^th low.
• The market has been in a tight trading range for over a month and is in breakout mode. While the bears have an argument for a test down below the March 22^nd high, they need to get more signs of strength, such as solid bear closes.
• The bears are hopeful that the market is forming a double top (April 18^th and May 1^st) and will break below the neckline (April 26^th) and fall for a measured move down, testing the March 24^th low.

Emini 5-minute chart and what to expect today

• Emini is down 20 points in the overnight Globex session.
• The bear have gone sideways for most of the overnight Globex session.
• After the consecutive bear trend bars on the daily chart, the bulls want today to disappoint the bears and form a trading range bar or a bull bar.
• Traders should assume the market will have a trading range open and going sideways for the first couple of hours. This means that most traders should consider not trading for the first 6-12 bars unless they are comfortable with limit orders.
• Most traders should focus on catching the opening swing trade that typically begins before the end of the second hour.
• While the odds favor a trading range, if the market begins to form strong trend bars on the open, traders cannot be in denial and must trade the market like a trade.
• Lastly, traders should pay close attention to yesterday’s low as it will likely be a magnet for most of the day.

Emini intraday market update

• The Emini gapped down and formed a strong two-bar breakout on bars 2-3.
• The Bears got a second leg down to bar 12. However, the rally up to bar 20 was strong enough to market the market, likely in a trading range and not a bear trend.
• While the bulls did an excellent job getting a rally up to bar 20 (8:10 AM PT), the selloff during the first hour lowered the probability of a bull trend day. This meant the odds favored a trading range day and mostly a sideways market.
• The bears got a wedge bottom on bar 32 (9:10 AM PT)  and the bulls got two legs up to bar 44, testing the bar 20 high.
• As of bar 46 (10: 15 AM PT), the market is Always In Long. The bulls want to reach the day’s open and close above today’s open.
• The market will probably reach the open and begin to go sideways for a couple of hours and decide on closing above or below it. Even if the bulls can close above the open, today will likely not be a strong bull trend day. The open of the day is basically the high of the day and so far the day has a big tail below. This means a trading range day is most likely.

Yesterday’s Emini setups

Al created the SP500 Emini charts.

Here are several reasonable stop entry setups from yesterday. I show each buy entry with a green rectangle and each sell entry with a red rectangle. 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 formed an upside breakout following yesterday’s FOMC release.
• While the bulls hope the rally will continue and break far above the April high, the trading range will likely continue.
• Traders will fade strong bull bars betting that gaps close. They will also fade strong bear trend bars.
• I have said several times that the odds are the bull channel that began on March 24^th will likely convert into a trading range and test prior lower highs. However, the bears need to get closes below the moving average (blue line), or else traders will assume every test of the moving average will fail.
• At the moment, the bears are trying to form a truncated wedge with April 14^th, April 27^th, and today’s high. A truncated wedge means that the last high forms a lower high instead of a higher high. This is due to sellers overwhelming buyers at the prior high (April 26^th). 
• Overall, traders should expect more sideways trading. The bears want today to close on its lower and reverse yesterday’s rally. This would set up a potential stop entry short for a test below the moving average.

Summary of today’s S&P Emini price action

Al created the SP500 Emini charts.

End of day video review

Live stream video review with Brad Wolff. Here is YouTube link:

Emini End of Day Video Review for Thursday May 4, 2023

 

See the weekly update for a discussion of the price action on the weekly chart and for what to expect going into next week.

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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.

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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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