Emini Bears Want Strong Follow-through Bar Today

Trading Update: Thursday April 13, 2023

S&P Emini pre-open market analysis

Emini daily chart

• The Emini gapped up yesterday, testing the high of April 4^th. However, yesterday sold off early on and closed as a big bear trend bar.
• Yesterday’s close is big enough to be a surprise bar. This means that traders probably expect at least a small 2^nd leg down. If today is a bull bar, it will likely have a weak bull close with a  tail above.
• The bears see yesterday’s close as a double top with April 4^th. They want a break below the neckline (April 6^th) of the double top and for the market to fall below the March 22^nd high.
• The bears had a strong close yesterday, which means that they have an opportunity to get a strong follow-through bar today. If the bears can get a follow-through bar similar in size to yesterday, that would increase the odds of lower prices.
• I have been saying that the rally up to April 4^th is stalling under important resistance (February 2^nd high). This means traders are taking profits anticipating a failed breakout above the February high.  This is similar to the March 13^th selloff that tested the December 2022 low.
• The reasons above make me think there is an increased risk of a deep pullback or a possible downside breakout that tests back to 4,000.
• If the bears get a reversal back down to 4,000 or lower, they need to show more signs of strength.
• Overall, the bears have done well with yesterday’s close. However, if bears fail to get follow-through over the next few bars, the bulls will buy, which could drive the market above the February high. This increases the odds of at least a brief 2nd leg down.  

Emini 5-minute chart and what to expect today

• Emini is up 12 points in the overnight Globex session.
• The Globex market has been going sideways for most of the overnight session.
• Traders should be neutral going into the U.S. Session.
• Traders should pay close attention to the first 6 – 12 bars of the day. The first 6 bars can often give a trader much insight into what the rest of the day will look like, so it is important to be patient and remember that there are 81 bars in the day, which means there is plenty of time to place 1-3 trades.
• Most traders should wait for the market to form a double top/bottom or a wedge top/bottom and see if it leads to a swing trade. A swing trade usually begins before the end of the second hour, and often, it starts around bar 12.
• Most traders should focus on catching the opening swing trade because it often leads to trade with good risk/reward and decent probability.
• Traders should expect a trading range day until they have reason to believe otherwise. The bulls will want to reverse yesterday’s bear close. However, the size of the bar will increase the risk of sellers on any bounce today.  
• Since yesterday’s bar is big and within a tight trading range on the daily chart, this will increase the risk of disappointing follow-through today. Both reasons above make me think the market will form a trading range today.
• Lastly, because yesterday is a big bear bar and a second entry short with April 4^th, the bulls may give up below today’s bar. This means that traders should be mindful of a possible bear trend day today, and if the bears start to get strong, bear closes, they must not be in denial.

Emini intraday market update

• The Emini gapped up on the open and formed a double bottom with bar 6.
• This led to a strong 3-bar bull breakout, and the market became Always In Long.
• The market went sideways for 15 bars to the moving average and recently got a second leg up at 9:30 AM PT.
• While the market is Always In Long at 9:40 AM PT, it is at important resistance (Yesterday’s 11:20 AM PT major lower high).
• While the market can continue much higher, it will probably try to stay within yesterday’s range and form an inside day.
• If the bears can develop more selling pressure, that will increase the odds of a pullback to 4,144, which is the midpoint of the 15-bar trading range.
• Traders should expect the market to evolve into a trading range soon. Less likely, the day remains a trend for the rest of the day.
• Since trends typically evolve into trading ranges, this means that the odds favor either a continued bull trend, or a trading range for the rest of the day.

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 got a strong bull close yesterday, closing above the past several days. The bull bars over the past two days are strong enough to increase the odds of a 2^nd leg up and a test of the February high.
• The bulls are hopeful that any breakout above the February high will find more buyers than sellers and that the bull trend will continue.
• More likely, the market is in a trading range. This means that the odds favor sideways soon.
• Today is an important bar, and If the bulls can get another bull bar closing on its high, that would be the third strong bull close in a row.  This would increase the odds of higher prices and a 2^nd leg up.
• The bears do not mind if the market goes above the February high as long as the breakout above quickly reverses back down.

Summary of today’s S&P Emini futures price action

Al created the SP500 Emini charts.

End of day video review

• Emini End of Day video review on YouTube with Brad Wolff

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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