Trading Update: Friday December 16, 2022
Emini pre-open market analysis
Emini daily chart
- The Emini daily chart closed below the November 1 high breakout point and closed below the past 24 bars. This is a sign of strength by the bears and increases the odds of lower prices.
- The bears need follow through, want bulls to give up and for the market to sell off down to the November 9 or November 3 low. While this is possible, the bears will likely be disappointed going into the end of the year.
- The market will likely have a hard time getting that far away from the 4,000 big round number before the end of the year.
- If the bears are going to get a downside breakout here, they need to show signs of strength. Traders will pay attention to see if the bears will get follow-through, increasing the odds of lower prices.
- The bears want yesterday to be a successful breakout below the month-long trading range, leading to at least a second leg down.
- The bulls see yesterday as a failed breakout of the month-long trading range and want to create a strong bull reversal bar today.
- The problem for the bulls is that the bears now have three consecutive bear bars, and the odds favor at least a small second leg down. This will likely make bulls hesitant to buy the first reversal up.
- Yesterday may be a second leg trap, with December 1 being the start of the first leg down. More likely, the bears will get at least a small second leg down after the breakout of the month-long trading range.
- Overall, most traders want to see one more bar before confirming that the market is Always In Short and strong enough for lower prices.
- Today is Friday, so weekly support and resistance are essential. The bears have an outside down week and want this week to close on its low. This means the bears will try their best today to have another strong bear close. The bulls want the opposite and for today to disappoint the bears and rally, creating a doji on the weekly chart.
Emini 5-minute chart and what to expect today
- Emini is down 36 points in the overnight Globex session.
- The bears sold off in the early hours of the Globex market after going sideways several hours last night.
- The Globex market has had several sell climaxes on the higher time frame chart such as the 30-minute chart.
- This increases the odds that last night’s sideways trading around 3,927 may be a final flag. This means the market may try and test back into this area sometime during today’s U.S. Session.
- As always, traders should assume the market will form a trading range on the open. This means most traders should consider not trading for the first 6-12 bars.
- Traders can also wait for a credible stop entry in the form of a double top/bottom or a wedge top/bottom.
- Today is Friday, so there is a greater risk of a surprise breakout up or down late in the day as traders fight over the close of the weekly chart.
- Overall, traders should expect the gap down on the open to lead to sideways trading and be open to the possibility of a rally testing the 3,925 area.
Emini Morning Update:
Yesterday’s Emini setups
Al created the SP500 Emini charts.
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 Encyclopedia of Chart Patterns have access to a much more detailed explanation of the swing trades for each day (see Online Course/BTC Daily Setups).
My goal with these charts is to present an Always In perspective. If a trader was trying to be Always In or nearly Always In a position all day, and he was not currently in the market, 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. As soon as traders are disappointed, many exit. Those who exit prefer to get out with a small profit (scalp), but often have to exit with a small loss.
If the risk is too big for your account, you should wait for trades with less risk or trade an alternative market like the Micro Emini.
EURUSD Forex market trading strategies
EURUSD Forex daily chart
- The bears broke above the measured move target (purple line) from the November 10 and 11 bull breakout. However, the market found sellers and yesterday closed as a bear bar.
- The bulls have had a tight bull channel since November 21. However, it is forming consecutive buy climaxes and increases the risk of a selloff down to the moving average and the forming of a trading range.
- At a minimum, the market will probably test the December 13 low, which is the bottom of the most recent buy climax and arguably the third push-up in a wedge top.
- Overall, traders should expect sideways to down over the next couple of weeks, and the market will form a trading range with the channel that began on November 21.
Summary of today’s S&P Emini futures price action and what to expect tomorrow
Al created the SP500 Emini charts.
End of day review
- I will update at the end of the day.
See the weekly update for a discussion of the price action on the weekly chart and for what to expect going into next week.
Trading Room
Traders can see the end of the day bar-by-bar price action report by signing up for free at BrooksPriceAction.com. Al talks about the detailed S&P Emini futures price action real-time throughout the day in the BrooksPriceAction.com on trading room days. We offer a 2 day free trial.
Charts use Pacific Time
When times are mentioned, it is USA Pacific Time. The Emini day session charts begin at 6:30 am PT and end at 1:15 pm PT which is 15 minutes after the NYSE closes. You can read background information on the market reports on the Market Update page.
