Interpreting S&P Emini Pre-Open Market Signals
- The recent bull bar failed to close above the previous high, indicating weakening bullish strength and a potential sideways to downward market movement.
- With the bulls losing momentum above the moving average, chances of a market test reaching the moving average soon are on the rise.
- Expectations lean towards a bearish closure for the day, with the possibility of a strong downward reversal marked by bear bars.
- While the June rally remains tight, foretelling more of a trading range than a bear trend in the near future.
- Although the bears have paused the buying, they need consecutive bear bars closing at their lows to better their chances for a second leg down.
- Given the distance from the moving average, a likely influx of buyers is expected upon retesting it.
- Overall, the daily chart forecasts a continued sideways movement with potential tests down to previous highs and lows, albeit over a stretch of several months.
Predictions for Today’s Market Behavior
- The Emini starts the day with a 12-point increase in the overnight Globex session.
- A tight bull channel has dominated the Globex market for most of the session on a 15-minute chart.
- A downside breakout was initiated by bears during the recent 8:30 AM EST report.
- Expectations are geared towards the evolution of the bull channel into a trading range on the 15-minute Globex chart, favoring a bearish breakout and a potential second leg down.
- Anticipations lie with the bears for the formation of a robust bear trend day, resulting in a bearish reversal on the daily chart.
- On the contrary, the bulls aim to avert a bear-trend day scenario.
- While the odds hint at a possible bear trend during the U.S. Session, the probability favors an open within a trading range.
- Traders should brace themselves for a sideways market open, with only a 20% chance of a trend and an 80% likelihood of a trading range initial.
- Most traders should exhibit patience, waiting for 6-12 bars before engaging in trades, to increase the likelihood of catching high or low points of the day and reduce the risk of being caught in a failed breakout.
- Expect the market’s opening range to expand and contract throughout the day, possibly resulting in significant losses at the open and challenges in recovering the losses if range contraction ensues later in the day.
- Given that it’s Friday, weekly support and resistance play significant roles, leading to potential surprise breakouts as traders close weekly positions.
- The market is likely to gravitate towards testing the midpoint of the week at 5,534.25, acting as a magnet for the day’s evaluations.
- Traders are advised to exercise patience at the market open, allowing for clarity to emerge. It’s common for multiple reversals to occur before a successful swing trade develops.
Highlights from Yesterday’s Emini Setups
A review of stop-entry setups from the previous day reveals strategic entry points marked by green and red arrows for buy and sell entries, respectively.
Traders are advised to consider the Brooks Trading Course and Encyclopedia of Chart Patterns for further detailed insights into swing trade setups for a near 4-year history.
It’s crucial to acknowledge that while most swing setups may not translate into actual trades, patience is key as many traders opt to exit trades upon disappointment to avoid significant losses.