Trading Update: Friday December 9, 2022
Emini pre-open market analysis
Emini daily chart
- The daily chart ended the 5-bar bear micro channel yesterday by going above the December 7 high. While bears have done a good job, we could see likely disappointment for bears.
- The market is in a trading range, which means traders should expect the pullback to be deeper than what the bears want.
- While the odds favor a second leg down, the bears may not sell until the market reaches a higher price, such as the December 6 high.
- The bear want to get a strong close below the November 1 high which would increase the odds of a downside breakout and test of the November 9 or 3 low.
- The bulls see the recent 5-bar bear micro channel sell vacuum test of the November 1 high. The bulls want to trap the bears and rally going into the end of the year.
- More likely, the market will go sideways for the rest of the year.
- The 4,000 considerable round number is an obvious magnet for the market going into the end of the year. It is a crucial round number that has influenced the market for over seven months.
- While the bears have a reasonable argument for getting a downside breakout and test of the November lows, they will likely run out of time before the end of the year.
- Today is Friday, so weekly support and resistance will influence today.
- The weekly chart has a bear bar closing below its midpoint. The bears want the market to sell off today and close below last week’s low (3,972.25) as a sign of strength.
- The bulls want the opposite and for today to rally. They want to damage this week’s bear bar as much as possible.
Emini 5-minute chart and what to expect today
- Emini is down 15 points in the overnight Globex session.
- The Globex market was in a bull channel for most of the overnight session.
- The bears got a 60-point bear breakout bar during the 5:30 AM PT report bar.
- This bear close will likely influence the U.S. Session and increase the odds of a second leg down after the rally. The deeper the pullback after the big bear breakout bar, the greater the risk that the second leg is sideways.
- As always, traders should assume the open will have a lot of limit order trading. This means most traders should consider not trading for the first 6-12 bars.
- Traders can also consider waiting for a credible stop entry, such as a double top/bottom or a wedge top/bottom.
- Since today is Friday, traders must be mindful that the market might have a surprisingly strong breakout late in the day as institutions decide on the weekly chart close.
Yesterday’s Emini setups
Brad created the SP500 Emini chart.
EURUSD Forex market trading strategies
EURUSD Forex daily chart
- The market is forming a tight bull channel and may be unable to escape the gravitational pull of the November 10 and 11 measured move target above (1.0697).
- While the bears can argue that the current channel up is forming a wedge top, the channel has many bull bars closing on their highs.
- This increases the odds that any wedge top will likely be minor and lead to more sideways trading than down.
- The odds favor a test of the moving average (blue line) soon; traders will hesitate to sell with the measured move target nearby. The reason is that if the odds favor a test of the measured move target above, most traders will instead look to sell after a test of the target.
- The bulls also have a potential negative gap (see chart above) which increases the odds of trapped traders, leading to higher prices.
- Overall, traders should assume the market will try and test the measured move target shortly, even if the market has to test lower first.
Summary of today’s S&P Emini futures price action and what to expect tomorrow
Al created the SP500 Emini chart.
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.