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Emini Increased Risk of Outside Down Day

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Trading Update: Wednesday August 21, 2024

S&P Emini market analysis

Emini daily chart

  • Yesterday formed a doji bar yesterday, which is a sign of a loss of momentum by the bulls. The daily chart has formed a 12-bar bull micro channel, which is climactic behavior.
  • The doji yesterday increased the risk of sellers above yesterday’s high and a reversal down. This increases the odds of today becoming an outside down day.
  • The 5,600 round number was a reasonable magnet for the market to test. The odds favored sellers above it and a reversal down back to the round number.
  • The daily chart is getting far from the moving average in an overall trading range. This increases the odds of a couple of legs sideways to down.
  • Overall, the odds favor a pullback, lasting a couple of legs. Because of the 12-bar bull micro channel, the odds favor sideways trading more than a strong reversal down.

Emini 5-minute chart and what to expect today

  • Emini formed a small gap up which was likely to close.
  • The Emini formed a parabolic wedge with bar 7 near yesterday’s high. This increased the risk of a reversal down, which happened on bar 9.
  • While bar 9 was a strong bear breakout bar, it increased the risk of a possible expanding triangle.
  • The bulls formed a strong two-legged rally to bar 15, which broke above yesterday’s high.
  • Bar 16 formed a strong reversal down and closed on its low. This was a strong enough reversal back into yesterday’s range. The odds favored a 2nd leg down.
  • The bears formed a strong bear breakout bar on bar 17. While the risk is that this is part of the opening expanding triangle, the selloff on bars 16-17 is a strong enough downside breakout that the odds favor sellers above and a test of yesterday’s low.
  • Because of the expanding triangle, the market may have to rally for a few legs sideways up before the bears get a second leg down.

Yesterday’s Emini setups

SP500 Emini 5-Min Chart Parabolic Wedge Reversal Down

Al created the SP500 Emini charts.

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.

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.

Summary of today’s S&P Emini price action

SP500 Emini 5-Min Chart Expanding Triangle Bottom Then Trading Range

Al created the SP500 Emini charts.

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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