E-Mini Bears Want Reversal Lower From Yesterday’s Bull Close


Emini daily chart

  • The S&P 500 Futures gapped down below yesterday’s low and reversed up, forming a bull trend from the open. Bears want reversal down today.
  • Yesterday’s signal bar is a breakout pullback for the bulls. With so many bars overlapping each other over the past ten days, this increases the risk of sellers above yesterday’s high and more sideways.
  • The bears tried to get a bear breakout yesterday. However, the bulls bought early on the open, forming a bull trend day.
  • The bulls want the small pullback bull trend to continue and rally up to the February 2nd high.
  • The market has been in a trading range for over five months. This means traders should assume that a breakout above the February high will fail until there is a clear breakout with follow-through.
  • The channel up from the March 13th low is tight with a possible measuring gap (March 22nd high, April 6th low). The open gap increases the odds of a measured move up to 4,300. However, traders have to remember that the market is in a trading range.
  • If the bears can develop more selling pressure below the February 2nd high, the Emini may break out to the downside and close the March 22nd high gap.
  • The market is spending much time below the February 2nd high, which means bulls are hesitant to buy high. If traders were confident that the market was going above the February 2nd high, it would not be going sideways as it has been over the past 11 days.

Emini 5-minute chart and what to expect today

  • Emini is 26 points down in the overnight Globex session.
  • The Globex market formed a second leg down after yesterday’s late selloff into the close of the U.S. Session.
  • The market is currently testing yesterday’s Globex Low.
  • The bears want the market to gap down today and reverse yesterday’s bull close on the daily chart.
  • As I often say, traders should expect a trading range open and consider waiting for 6-12 bars before placing a trade.
  • The first 6-12 bars can give a trader a lot of information about the day, and since the open typically has frequent reversals, it is generally better to wait.
  • As I often say, most bears should wait for the opening swing trade to develop. The opening swing typically begins before the end of the second hour. There is generally a 40% chance that the range will double during that opening swing.
  • It is common for the opening swing to begin after forming a double top/bottom or a wedge top/bottom.
  • For the above reasons, most traders should focus on catching the opening swing since it is easier to structure the trade. Also, traders can generally go for two times their risk.
  • Overall, traders should expect a trading range open until there is a clear, strong breakout with follow-through. If today is going to be a trend day, there will be plenty of time to enter the direction of the trend, so it is typically better to wait for signs of a trend to develop.

Yesterday’s Emini setups

SP500-Emini-5-Min Chart


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