Al Brooks | April 11, 2023 09:24AM ET
h2 S&P E-Mini Pre-Open Market Analysis/h2
- The bull got off its high yesterday in a strong bull bar. Bulls look for a micro double bottom yesterday that would lead to a rally above the April 4 high.
- As the market is in a trading range, the e-mini will soon disappoint the bulls.
- Although the market is always long and will likely go higher, it is within a large trading range. The market has started to stall below a key resistance level above the February 2nd high.
- When the market stalls just below a critical resistance level, it is a sign that the market is in a trading range and momentum is not as strong as it could be.
- If the bulls were strong, they would not have allowed the market to stagnate below the February 2 high. Instead, the bulls will break well above the February 2nd high. This means traders are selling before the market reaches the February 2nd because they are less confident that the market will reach the February 2nd high before a deeper pullback.
- The next important magnet is the March 22 breakout point high.
- The bulls want to trap the bears and prevent the market from reaching the March 22 high. There are bears who sell this high and scale between higher. These bears are holding a losing position and deciding what to do.
- If the market continues to move sideways and generate selling pressure, the chances increase that the market will break below the March 22 high and let the bears out.
- Bears ultimately want to test the March 13 low. Trading ranges often have deep pullbacks. This means traders should be prepared for a possible lower high from the February 2nd high and a test back to the March 13th low.
- Overall, the bears did not generate enough selling pressure to convince traders that the bulls had lost control. This means that sideways to up is probably in the next few days.
h3 E-mini 5-minute chart and what to expect today/h3
- E-mini rose 1 point in the overnight Globex session.
- The market failed to break above yesterday’s range in the morning Globex hours.
- Bears recently had a downside breakout and the market wants a second leg down.
- Traders should open the US session neutrally.
- As I often say, most traders should wait 6 – 12 times before trading unless they are comfortable with limit orders and quick decisions.
- Most traders should focus on catching opening swings that often form before the end of the second hour after a double top/bottom or wedge top/bottom formation.
- Traders can wait for a strong breakout with a follow-through closing beyond resistance.
- If there is a lot of sideways trading at the open, traders should focus on the opening of the day. Trading range days often repeatedly test the day’s open.
- The most important thing to keep in mind is to be patient and wait for a good setup.
h3 Yesterday’s e-mini setup/h3
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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 the Encyclopedia of Chart Patterns have access to a nearly 4-year library of more detailed explanations of swing trade setups (see Online Courses/BTC Daily Setup). Encyclopaedia members add current daily charts to the encyclopedia.
My goal with these charts is to present a consistent perspective. If a trader tries to stay in a position all day or almost always and he is not currently in the market, then 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. Many exited as traders became frustrated. Exits prefer to exit with a small profit (scalp), but often exit with a small loss.
If the risk is too high for your account, you should wait for a trade with lower risk or trade in an alternative market like Micro E-Mini.