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Emini Bulls Want Upside Breakout and Close above Yesterday’s High

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Trading Update: Wednesday December 21, 2022

Emini pre-open market analysis

Emini daily chart

  • Yesterday closed as a bull bar, ending the daily chart’s five consecutive bear bar streaks. Bulls want upside breakout and close above yesterday’s high.
  • The odds are that the market will bounce for a couple of days.
  • The rally’s midpoint that ended on December 13th is 3,841. This is close to where the market is now and may act as support as the bulls try and form a bottom.
  • Since the bears have a five-bar bear micro channel, which will limit the bulls’ upside potential. This increases the odds that the first reversal up will fail and lead to a second leg down.
  • The daily chart is in a trading range, so traders will wonder if the rally will be deep and disappoint bears before there is a second leg down.
  • Bulls want the current leg down to be a 2nd leg trap with December 21st. The problem with this argument is that the selloff last week broke below the month-long trading range, which increases the odds of lower a 2nd leg down.
  • The bulls will see the recent selloff as a higher low major trend reversal. They want the market to form a double bottom and rally above the December high. The market will likely continue sideways going into the end of the year.
  • Over the next few days, traders will pay close attention to see how strong the bulls are. If the bulls can get strong consecutive bull closes, it will increase the odds of a deeper pullback. If the bulls are unable to get strong consecutive bull bars closing near their highs and above prior bear bars, it will increase the odds of more sideways to down.

Emini intraday market update

  • The market formed a tight trading range open for the first 6 bars and got a strong upside breakout with follow-through at 7:10 AM PT.
  • The bull breakout and follow-through are strong enough to make the market Always In Long, either in a bull trend or a trading range day.
  • While the market may rally for the rest of the day, with the first 6 bars overlapping and the moving average being far away, there is an increased risk of the market going sideways to get closer to the 20 period moving average.
  • I am writing this during the 7:20 AM PT bar, and at the moment, the bulls have a reasonable chance of getting a measured move based on the bar 7-8 bull breakout

Emini 5-minute chart and what to expect today

  • Emini is up 28 points in the overnight Globex session.
  • The market has been in a broad bull channel, primarily a trading range, since yesterday’s U.S. Session Close.
  • Since the Emini is likely to rally over the next couple of days, it is reasonable for traders to look for a rally today and for the Emini to close above the open of the day.
  • As always, traders should expect a trading range open lasting 6-=12 bars. This means most traders should consider waiting for at least 6 bars before placing any trades unless they are comfortable with limit order trading.
  • Traders can also wait for a credible stop entry in the form of a double top/bottom or a wedge top/bottom. This is because most days have a swing during the opening range from one of the patterns listed above.
  • While today has the potential to be a bull trend day, traders should assume today will be a trading range day until there is reason to believe differently. If today is going to be a strong trend day, there will be plenty of opportunities to enter in the direction of the trend.

Yesterday’s Emini setups

Emini bear trap then parabolic wedge top and trading range. Bulls want upside breakout.

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

EURUSD Daily: Second Leg Down Likely to Moving Average
  • The EURUSD has been forming a very tight trading range over the past few days after creating a wedge top.
  • The odds are that the market will have at least a small second leg down to the moving average and the December 12th low, which is the bottom of the third leg in the wedge top.
  • The bulls can argue that the market is in a small pullback bull trend. However, it is becoming climactic. The bears have had multiple reversal attempts, and the market has been away from the moving average (blue line) for 28 bars which is climactic behavior.
  • Overall, traders will expect a pullback to the moving average and a test of the December 12th low soon.
  • The rally up to the December high is the first breakout of the bear channel on the higher time frame. This increases the odds of the market having a deep pullback on the daily chart, which would form a higher low major trend reversal.

Summary of today’s S&P Emini futures price action and what to expect tomorrow

Emini failed low 2 top then bull trend from the open followed by parabolic wedge tops and a ledge in a trading range with a higher high major trend reversal

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.

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