Trading Update: Monday December 12, 2022
Emini pre-open market analysis
Emini daily chart
- The bears are trying to get a second leg down after the 5-bar bear micro channel that began on December 1. However, the second leg will likely disappoint the bears and the market will continue sideways into year end.
- The market formed a wedge top on November 30, which is reasonable to have two legs down.
- At the moment, the odds favor a second leg down after the five-bar micro channel. The bulls are trying to prevent the November 1 high breakout point high from closing.
- The bears want the market to close far below the November 1 high and get a downside breakout testing the November lows. While the bears have a reasonable argument for this, they will likely run out of time this year before a strong downside breakout occurs
- Overall, the daily chart is in a trading range and continues sideways, around 4,000 going into the end of the year.
Emini 5-minute chart and what to expect today
- Emini is up 12 points in the overnight Globex session.
- The Globex market has been in a bull rally since the early morning.
- Traders should expect a limit order market and sideways on the open. This means traders should consider not trading for the first 6-12 bars unless they are comfortable with limit order trading.
- Traders can also consider waiting for a credible stop entry as a double top/bottom or a wedge top/bottom.
- Traders should assume trading range price action until there is a clear breakout with follow-through, giving the market a clear Always In direction.
- Overall, traders should expect a trading range day, especially if the open of the day is near the middle of the day’s range.
Friday’s Emini setups
Al created the SP500 Emini charts.
EURUSD Forex market trading strategies
EURUSD Forex daily chart
- The EURUSD is forming a small pullback bull trend after the November 10 and 11 upside breakout.
- The bulls are trying their best to reach the measured move target above (1.0699).
- The bears are trying to form a wedge top and, at a minimum, test the moving average (blue line) below.
- Wedge tops are common in small pullback bull trends, and most lead to minor reversals. Traders must be cautious because any pullback will likely lead to sideways price action.
- The target above (purple line) is close enough that the market may be unable to escape the magnetic pull of the target.
- Even if the bears get selloff down to the November 21 low, the bulls will see it as a higher low following the rally that began in November. The November rally is likely one leg up on the higher time frames. This means that the odds favor a second leg after any pullback.
- Lastly, the EURUSD has been in a bear channel since July 2021. Bear channels typically convert into trading ranges, which means the odds favor higher prices.
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.