S&P 500 E-Mini in Breakout Mode

ESM24
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Emini daily chart

• o    The S&P 500 Futures gapped up yesterday, testing near the March 12th high close, and found sellers. The daily chart is forming a tight trading range, which is a breakout mode pattern.
• o    Traders are becoming less interested in buying far from the moving average. This increases the odds that the market is likely to go below the moving average soon.
• o    If bulls expect the daily chart to fall below the moving average, they will be unwilling to establish long positions until they see the test of the moving average.
• o    Traders are not expecting a strong breakout below the moving average.
• o    The bears need to get two strong closes below the moving average or 3-4 average bars closing below the moving average before traders will consider the bears being in control.
• o    This means that the best the bears can likely hope for is a trading range.
• o    Overall, the daily chart is in a tight trading range, which is a breakout mode pattern. This means that the probability is close to neutral for both the bulls and bears. However, the market has been above the moving average for more than 18 bars. This means that the odds slightly favor the upside breakout of the tight trading range.

Emini 5-minute chart and what to expect today

• o    Emini is down 19 points in the overnight Globex session.
• o    The Globex market went sideways for several hours during the overnight hour and led to a second leg down during the early morning hours.
• o    The bears are hopeful that today will gap down during the U.S. Session and lead to a bear trend day.
• o    More likely, the U.S. Session will be a trading range.
• o    As I often say, traders should expect a trading range open. This means that most traders wait for 6-12 bars before placing a trade.
• o    Most traders should try to catch the opening swing that often begins before the end of the second hour. Traders can wait for a double top/bottom, or a wedge top/bottom before placing a trade in order to catch the opening swing.
• o    Overall, the Emini has been in a trading range for weeks. This will cause traders to pay attention to yesterday’s low betting that there are buyers not far below.

Yesterday’s Emini setups

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