S&P 500 E-Mini Likely in Breakout Mode

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S&P Emini pre-open market analysis

Emini daily chart

• The S&P 500 Futures daily chart is forming a contracting trading range, which is likely a breakout mode pattern. This is a warning that the bulls are bears becoming balanced and neutral.
• The market is between two important price levels, the June 26th low and the June 16th high.
• The market is Always In Long and holding above the moving average, the market. However, the market would not be begging to go sideways if the bulls had a big advantage.
• Breakout mode is a type of trading range, which means most breakouts fail and reverse. This means traders should use caution and expect sideways price action until there is a strong breakout with follow-through.
• The bulls have done well over the past couple of weeks, preventing strong bear bars. This is a sign that the bulls have slightly more control over the market than the bears.
• Overall, traders should expect sideways trading and lots of disappointment for both the bulls and the bears.

Emini 5-minute chart and what to expect today

• Emini is down 9 points in the overnight Globex session.
• The Overnight Globex Market formed a bear channel during last night’s session and had a rally during the early morning hours.
• The rally up over the past 5 hours is strong, and the odds are the market will get a second leg up.
• The downside is probably limited over the next couple of hours. This means the open will probably be a trading range or a bull trend and, less likely, a bear trend.
• If there is a selloff on the open, it will probably be limited and lead to a trading range.
• As I often say, traders should expect a lot of sideways trading on the open. Most traders should consider not trading for the first 6-12 bars since the open often forms a trading range.
• Most traders should focus on catching the opening swing that often begins before the end of the second hour. There is an 80% chance that the open will form a double top/bottom or a wedge top/bottom. A trader can likely wait for one of these patterns to form and have a reasonable chance of catching a swing.
• Overall, traders should assume that a trading range is likely until there is a clear breakout with follow-through.

Friday’s Emini setups

SP500-Emini-5-Min Chart

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