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Emini Bulls Trying for 2nd Leg Up

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Trading Update: Wednesday March 29, 2023

S&P Emini pre-open market analysis

Emini daily chart

  • Emini Bulls Trying for 2nd Leg Up as bears failed to get a decent entry bar after Monday’s bears close. This is another reminder that the market is in a trading range on the daily chart.
  • The bulls want yesterday to be a pullback from the March 24th buy signal bar.
  • The most important thing to realize on the daily chart is that the market is in breakout mode. This means that stop entries are all low-probability trades. Traders should expect the breakout up or down to be 50%.
  • Eventually, the market will get a successful breakout with follow-through; however, until then, most traders should wait.
  • When the market is in breakout mode, making money can be difficult, even with limit orders. The probability is too close to 50%, making it hard for traders to gain an edge.
  • Also, the longer the market goes sideways, the greater the probability of a breakout soon, which will trap limit order traders betting on failed breakouts.
  • Overall, the market is above the 4,000 big round number, and deciding if the market will rally 100 points or selloff 100 points.

Emini 5-minute chart and what to expect today

  • The Emini is up 40 points in the overnight Globex market.
  • The Globex market rallied for most of the overnight session. On the 60-minute chart, it is clear that last night’s rally is a 2nd leg up from last Friday’s rally.
  • The bulls want the market to gap up and form a strong bull trend day.
  • More likely, today will be another trading range day. Traders should be open to a possible opening reversal after a brief rally. The logic is the same as a trader who buys above a bar and scalps out for two points. If traders suspect the market is in a trading range, they will quickly exit after a scalping profit. This means that there is added risk that the market may gap up, form a brief rally, and enter a trading range.
  • Overall, as I often say, most traders should expect a trading range day and for the market to go mostly sideways.
  • Most traders should wait for a swing trade to develop and avoid trading the first 6-12 bars.
  • A credible swing trade will often form after a double top/bottom or a wedge top/bottom. This means that most swing traders on the open take at least 6-12 bars to form, so there is really no rush to trade on the open.
  • 10:40 AM PT: Bears have a double top with 7:05. Strong enought two bar breakout (current and prior bar) that the odds favor at least a small second leg down.
  • 11:45 Tight bull channel testing the high of 10:30. The past 6 bars are strong which increases the risk of an upside breakout. The bulls want a bull trend day and a second leg up following the gap up on the open. The odds are the day will remain a trading range day. The bulls need a strong upside breakout or else the trading range will continue.

Emini intraday market update (I will try and update through-out the day).

  • The Market gapped up and has 4 overlapping bars. So far this is Trading Range price action.
  • The market now how 6 overlapping bars, this is a sign of continued Trading Range price action and breakout mode. Most traders should wait for a clear breakout with follow-through.
  • The market formed a wedge top on bars 1, 4, and 7 and got a two bar breakout on bars 8 and 9 but the follow-through was bad (bar 10).
  • The bulls want a double bottom with bar 1 and bar 10, however sideways is probably more likely.
  • 7:50 AM PT, trying to form a wedge bottom, however the channel down is tight, therefor the first reversal up will probably fail.
  • Because of the Gap up, the market will probably try and form a bottom near the moving average and begin to go sideways soon.
  • 8:55 AM PT: The market is trying to reach the 7:05 high close of the day. It was reasonable to buy this bar so the market so get closer to it and allow those bulls out of a trade. Trading Range day, so expect the market to be forgiving. Big Down Big up so expect continued Trading Range Price Action. The bulls see a Gap Up day and they want a bull breakout of the 7:05 high and a bull-trend day.

Yesterday’s Emini setups

SP500 Emini 5-min Chart Trading Range Open and Trading Range Day

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 a High 1 buy setup on March 27th and found buyers above the bar yesterday. A high 1 buy setup after a strong breakout, such as the rally up to March 23rd, typically will lead to a 2nd leg up. This will increase the odds of higher prices.
  • This means there are probably buyers above March 27th who will be willing to scale in lower.
  • The bears need to develop more selling pressure before they have a reasonable chance at a reversal down.
  • The bears did a good job closing the breakout point high (March 15th high and March 24th low). This increases the odds that this rally is a bull leg in what will become a trading range.
  • The market may have to get up to the February 1st buy the close bar. It was reasonable to buy it, even though it was a climactic bar and the odds favored a pullback. Also, the market never let the February 1st buy the close bulls out. These reasons above will increase the odds of the market reaching the February 1st close.
  • Overall, the market is probably going higher. However, it will likely enter a trading range soon and continue sideways.

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

SP500 Emini 5-Min Chart Wedge Bull Flag near EMA after Big Gap Up Broad Bull Channel

Al created the SP500 Emini charts.

End of day video review

Brad hosted a live stream End of Day Review at 1:00pm PT and answered questions.

 

    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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