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Emini Traders Likely to Face More Sideways Trading

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Trading Update: Monday May 15, 2023

S&P Emini pre-open market analysis

Emini daily chart

  • Emini traders likely to face more sideways trading in a tight trading range on the daily chart.
  • The market is in breakout mode, which means traders should assume that the probability is close to 50% for both the bulls and the bears.
  • The bears want a downside breakout and a test back to 4,000 Big Round Number.
  • The bulls want the upside breakout and a rally to the February high. The bulls also have a credible bull breakout of a bear flag (March 13th low to March 22nd high) that projects up to 4,300.
  • Since the market is in breakout mode, most traders should wait for a clear breakout with follow-through and assume that all breakouts will fail until then.
  • When the market is in a triangle or a tight trading range, it always looks like the breakout will happen soon. However, the market continues sideways for a long time, so it is important not to be too eager.
  • The most important thing to remember is that the market is neutral and balanced.

Emini 5-minute chart and what to expect today

  • Emini is up 12 points in the overnight Globex session.
  • The overnight Globex market rallied from near the lows of a trading range that began over a week ago.
  • The market is still within a tight trading range on the daily chart, which means that odds are today will have a lot of trading range trading.
  • Traders should expect a lot of trading range price action today. This means that traders should pay attention to the day’s open as it will likely be a magnet during the day.
  • Most traders should wait 6-12 bars before placing a trade unless they can make quick decisions and are comfortable with limit orders. There is often a report around bar 6, leading to a fast breakout and trapping traders into a losing trade. This is why most traders should wait until after bar 6 before placing a trade.
  • Most traders should try and catch the opening swing that will typically begin before the end of the 2nd hour. This is at least an 80% chance of an opening swing and a 40% chance that the opening swing will double the range of the day. The opening swing often begins after the formation of a double top/bottom or a wedge top/bottom. This provides great risk/reward for traders.

Emini intraday market update

  • The Emini formed a bear breakout on bar 1 and sold off to bar 9 (7:15 AM PT).
  • The selloff to bar 9 formed a parabolic wedge bottom, around a 50% pullback from last Friday’s late rally.
  • The Bulls got a surprise reversal during bar 11 (7:25 AM PT). This was a good entry bar for the bulls, increasing the odds of higher prices.
  •  The problem with the bulls is that the selloff down to bar 9 is tight. This increases the risk of the market forming a trading range and not a strong bull trend.
  • Both the size of the selloff and the rally that followed increased the odds of the day having a lot of trading range price action.
  • The Bulls have done an excellent job getting back to the day’s open (bar 24 (8:30 AM PT). Traders should be prepared for a deep pullback that allows scale in bears to avoid a loss. Unless the bulls break far above the bar 1 high, the odds are that the market will remain in a trading range and that there will be sellers around the day’s open.

Friday’s Emini setups

SP500 Emini 5-Min Bear Trend From Open Outside Down into Major Trend Reversal. Likely more sideways trading.

Richard created the SP500 Emini charts (Al on leave).

Here are several reasonable stop entry setups from Friday. 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

EURUSD Daily: 2nd Leg Down Likely
  • The EURUSD had a bear breakout with follow-through below the moving average (blue line) and is probably Always In Short.
  • However, it is important to realize that the market is Always In Short, in what will likely become a trading range. This means the bears will likely become disappointed soon, and the market will go sideways.
  • The market may have to test down to the March 24th low, the bottom of the bull channel.
  • Overall, the bears expect a 2nd leg down, even if there is a deep pullback first. The Bears have done enough to increase the odds of a 2nd leg down after any rally.

Summary of today’s S&P Emini price action

SP500 Emini 5-Min Trending Trading Range Day and Inside Day

Richard created the SP500 Emini charts (Al on leave).

End of day video review

Live stream video review 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.

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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