Emini and Forex Trading Update:
Monday December 16, 2019
I will update again at the end of the day.
Pre-Open market analysis
The Emini had a dramatic rally on Thursday morning on news of possibly no new China tariffs on December 15. It has been sideways since. Friday was a doji bar on the daily chart and therefore it is a low probability sell signal bar for today. The bears want Thursday’s breakout to fail. A reversal down would be from an expanding triangle top over the past month. However, any reversal down will probably be minor because the bull trend on the weekly chart is so strong.
The bulls see Friday as a pause after a climactic 2 week rally. They have had a great year. The year opened on its low and the bull trend has been very strong. They will try to get the year to close on its high. That will limit the downside for the rest of the month.
I have been saying for months that the Emini will work higher. That is still true, but Thursday was climactic. Therefore, there might be a pullback for a day or two this week.
Overnight Emini Globex trading
The Emini is up 14 points in the Globex session. It might gap up on the daily and weekly charts to a new high. Traders see the 3200 Big Round Number as a magnet above. The Emini will probably get there this week and maybe today. This is especially true with the strong bull trend on the weekly chart and the desire of the bulls to have the year close on its high.
A small gap up usually closes early in the day. However, with the strong momentum up on the daily and weekly charts, the odds would favor a pullback instead of a reversal. Unless the bears get several bear bars closing near their lows on the open, traders will look to buy any early selloff.
The Emini is in a buy climax and at resistance on the daily chart. That increases the chance of a trend day up or down. But most of the days over the past few weeks spent a lot of time going sideways, even though the Emini has been going up. Unless there is a strong breakout up or down early today, traders will again expect a lot of trading range price action.
Friday’s setups
Here are several reasonable stop entry setups from Friday. I show each buy entry with a green rectangle and each sell entry with a red rectangle. I rarely also show limit order entries and entries on the close of bars. Buyers of the Brooks Trading Course and Encyclopedia of Chart Patterns have access to a much more detailed explanation of the swing trades for each day.
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.
EURUSD Forex market trading strategies
The daily chart of the EURUSD Forex market had a big bear reversal day on Friday. It is a sell signal bar for today for a failed breakout above the October high and the bear trend line.
However, it is in a 5 month trading range and the 3 week bull channel is tight. That lowers the probability of a reversal down. Furthermore, the bar on Friday was big. A big bar means big risk.
When there are things wrong with a sell setup, the reversal is usually only minor. Consequently, if there is a selloff this week, it will probably find support around the December 6 low.
Because the 3 week bull channel is tight, sideways to up is likely. In addition, the August 6 high is the top of the 5 month range and that is a magnet above. Therefore, traders should expect a test of that high within a few weeks even if there is a 1 – 2 week pullback first.
Overnight EURUSD Forex trading
The 5 minute chart of the EURUSD Forex market did not fall below Friday’s low. It therefore did not yet trigger the sell signal on the daily chart. That lack of urgency is evidence that the sell setup is not strong.
The overnight session opened near its low and rallied. But the range has only been 25 pips. It therefore did not erase much of Friday’s selling. The bulls want today to close near its high. It would then be a buy signal bar on the daily chart for tomorrow.
However, Friday’s selloff was strong enough so that traders expect at least a small 2nd leg sideways to down this week. That will limit today’s rally. The lack of triggering a sell signal makes a big bear day unlikely. Today will therefore probably remain a small, scalping day.
Summary of today’s S&P Emini futures price action and what to expect tomorrow
Here are several reasonable stop entry setups for today. I show each buy entry with a green rectangle and each sell entry with a red rectangle. I rarely also show limit order entries and entries on the close of bars. Buyers of the Brooks Trading Course and Encyclopedia of Chart Patterns have access to a much more detailed explanation of the swing trades for each day.
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.
End of day summary
The Emini gapped above last week’s high and rallied to slightly above the 3200 Big Round Number. It stalled there for most of the day. There was a minor reversal down from a wedge top in the middle of the day. Today closed just below 3200.
The odds continue to favor higher prices, even if there is a 1 – 3 day pullback. Additionally, despite the 3 week rally, most days have had mostly trading range price action. Day traders will expect that to continue until there is a clear, strong breakout up or down.
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. I talk about the detailed S&P Emini futures price action real-time throughout the day in the BrooksPriceAction.com trading room. We offer a 2 day free trial.
Charts use Pacific Standard Time
When I mention time, it is USA Pacific Standard Time (the Emini day session opens at 6:30 am PST, and closes at 1:15 pm PST). You can read background information on the intraday market reports on the Market Update page.
Hi, Al,
I’ve been having a headache that I tried very long time to overcome – I sometimes could not wait for the bar to close and rush into positions, and usually it ends with very complicated position management methods just to avoid loss or gain small profits. And I’ve found if I review the day’s trades with your BBB, on which every click shows a already-closed bar, I do not have this rush-into-position issue. Recently, I have to figure out a method that I use my screen to block the forming bar when the market is working on that bar’s close. I usually block that bar for 4 minute 30 seconds for thinking, and use the final 30 seconds to make a trade decision. It’s actually a very live BBB version. Not sure how do you think…..will I miss the PA reading? Because I see you are reading ticks in your trading room when the bars are working on closing themselves.
You are avoiding loss and you need to fix it before you start expanding everything else, otherwise you are just building everything on it.
Step back, make simple rules for entry and exit and compare it with what you are doing now.
You have nothing to lose by doing so.
Al never talks about this real shit behind trading, I think he forgot what it was like:)
Thank you. But what is wrong if scaling in can avoid loss? My problem here is that I will not take some bad trades when I review the BBB after the day ends, while I rush into positions when the bars are forming in live trading. Now I need to fix this rush issue. I can tell if I am unreasonably avoiding loss or I believe things are under control – if my confidence becomes something like “hope”, I cut the losers without the second thoughts. 80% of the time, I avoid loss. And 10%of the time, I will cut the losers right after I feel things are not right, another 10% of the time, I can manage to take small loss because I would manage to control the position sizes of the losing trades. It’s just I need to minimize the number of bad trades and accumulate reasonable scaling trades into the best trade of the day, and maximize the number of reasonable trades within that 80%. This is what I believe. I am still trying, and for years I do not think I am a good scalper and can sit though frequent in and out without feeling the market is draining my energy.
Hi there, this is not really place for outgoing discussion. If you seek more advise go to Al Brooks web site and start discussion:)
Just to say, nothing is wrong with scaling in to avoid loss.
I can only guess from limited nformations we exchange here:
“I sometimes could not wait for the bar to close and rush into positions, and usually it ends with very complicated position management methods just to avoid loss or gain small profits.
Have you asked yourself why do you do it?
Could you possibly do it becouse you are avoiding loss?
You are doing sth wrong and you need to find what it is. Try to fix your worse before expanding your best:)
take care and good luck
Thank you very much. I am fixing my bugs one bug a time. and yes, you are right, this bug – “I sometimes could not wait for the bar to close and rush into positions, and usually it ends with very complicated position management methods just to avoid loss or gain small profits.” is the first one need to be smashed.
That is interesting. However, they have this disclaimer (I thought perhaps you were looking at another contract, but nope they don’t show it).
Disclaimer. All market data contained within the CME Group website should be considered as a reference only and should not be used as validation against, nor as a complement to, real-time market data feeds. Settlement prices on instruments without open interest or volume are provided for web users only and are not published on Market Data Platform (MDP). These prices are not based on market activity.
Well, my chart provided by interactive brokers didn’t reach 3200 as well.
ESH0 reached it, but ESZ9 did not, I think. ESZ9 seemed to be around 3 points under ESH0 at all times. It was very hard to anticipate which of the two contracts would be considered a “big round number” by most traders and a possible resistance.
The next contract becomes the “lead month” on the Thursday before expiration week. For example on December 12th, March futures became the lead contract and volume started shifting from the December contract. Some people will wait until Friday but by this Monday you should have been trading March.
According to CME chart emini es has never reached 3200.
That is because you are looking at Dec contract. March 2020 contract is the front contract starting today.