Trading Update: Friday December 23, 2022
Emini pre-open market analysis
Emini daily chart
- Emini bears got a second leg down yesterday from the five-bar bear micro channel that began on December 13th. The Bulls want a second entry test rally to the December 6th low.
- Yesterday’s breakout was strong. However, the bears could not get the market to close on its low or below the December 20th low.
- Traders bought aggressively into yesterday’s close, causing the market to close well above yesterday’s midpoint.
- The December 21st bull breakout bar was strong enough to get a second leg, even though it was a minor reversal in a five-bar bear micro channel. It is possible that yesterday was also a pullback from the December 21st bull breakout, and today will form a second leg up for the bulls.
- Since the daily chart is in a trading range, traders should expect the bears to become disappointed by the pullback following the five-bar bear micro channel.
- Bulls bought the bottom of the month-long trading range on December 6th, and they will probably scale in lower and be able to exit back at the December 6th low. This means that market is probably going back to the December 6th low and possibly the 4,000 big round number soon.
- With only 6 trading days left in the year, the market will likely begin to go sideways between the 50% pullback of the October – December rally and the 4,000 big round number.
- Today is Friday, so weekly support and resistance are important. The low of last week is at 3,855.25, which is not far from the current price. The bears will want to close below it, and the bulls will want to close above it.
- Last week was a big outside down bar, and this week is the follow-through bar. The bears will try and get a downside breakout today and close the market on its low as much as possible. The bulls want the opposite and will try to keep the market from closing below last week’s low.
- Traders expect the bears to become disappointed today and for the market to rally above yesterday’s high. The bulls want today to be a bull bar closing on its high, forming a second entry buy for a test of the December 6th low.
Emini intraday market update
- The market had a small gap down and reversed up during the bar 7 report bar.
- The rally up to 7:40 AM PT is strong enough to put the market in a trading range or a bull trend.
- At the moment, the bears have four consecutive bear bars at 8:00 AM PT making the market a trading range most likely.
- Traders should assume the market will likely go sideways around the open of the day or the bar 10 low.
- The odds are low that the day will become a bear trend day, and the selloff that began at 7:45 AM PT will likely be a bear leg in a trading range.
- The selloff down to 8:00 AM is strong enough to increase the odds of at least a small second leg down, however, the second leg will likely be limited and stall around the bar 10 low if it gets there.
Emini 5-minute chart and what to expect today
- Emini is down 2 points in the overnight Globex session.
- Since yesterday’s close, the Globex market has been going sideways in a trading range.
- The bears got a downside breakout during the 5:30 AM PT report bar; however, the market reversed up, and the bear breakout failed. Then moved lower again.
- Traders should be open to a possible bull trend day and a close above the open due to the reason stated above regarding the daily chart.
- As always, traders should expect a trading range open and the market to go sideways on the open. Traders should consider not trading for the first 6-12 bars unless they are comfortable with a limit order market.
- The open can form big breakout bars that often fail, so it is essential to be cautious. It is easy to get trapped on the open and take a big loss making it difficult to recover before the end of the day.
- Since most of the time, the market goes sideways for the first hour, traders will often not miss anything if they are patient and wait.
- Traders can also wait for a credible stop entry in the form of a double top/bottom or a wedge top/bottom.
- Since today is Friday, traders should be mindful of the possibility of a surprise breakout up or down late in the day as institutions decide the fate of the weekly chart.
Yesterday’s Emini setups
Al created the SP500 Emini charts.
EURUSD Forex market trading strategies
EURUSD Forex daily chart
- The EURUSD continues to go sideways in a tight trading range just above the moving average.
- The bears are breaking the bull trend line by going sideways instead of getting a downside breakout. The market may continue sideways in a tight trading range until it reaches the moving average below.
- The market has been away from the moving average for over 25 bars. This climactic behavior will make it difficult for the market to get a successful breakout to a new high without reaching the moving average.
- If the bulls get a breakout above the December 15th high, the market will likely fail at a new high and reverse back down to the moving average.
- Overall, traders should expect the market to continue going sideways to the moving average.
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.
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.