Emini and Forex Trading Update:
Tuesday December 31, 2019
I will update again at the end of the day.
Pre-Open market analysis
Yesterday sold off on the open. By trading below Friday’s low, the Emini triggered a sell signal on the daily chart. There is a parabolic wedge buy climax, and that often attracts profit-takers. The bears want another bear day today. That would confirm the minor reversal and increase the chance of lower prices this week and possibly for 2 weeks.
However, the bulls are trying to get the year and the decade to close at a new all-time high. The current high is Friday’s high, but that is probably too far above for the Emini to get there today. However, the bulls have been strong for a year and for a decade. That slightly increases the chance of a trend up today to a new high.
New Year’s Eve is often a quiet day. However, there still can be a big move in the final hour. If the Emini is within 10 points of the all-time high going into the final hour, traders should be ready for a possible Buy The Close trend up to a new high.
Overnight Emini Globex trading
The Emini is down 2 points in the Globex session. New Year’s Eve usually spends a lot of time in a relatively tight range. Yesterday was in a trading range for 6 hours. Today is opening within that range. This increases the chance of a trading range open.
Since 90% of days have at least one 4 point swing trade that starts within the 1st couple hours, that is likely again today. However, today will probably spend a lot of time going sideways. If so, that will reduce the number of stop entry setups.
Because today is the final day of the year and of the decade, there is an increased chance of a surprisingly big move up or down, especially in the final hour. It is easy to get complacent if the day is in a tight trading range for most of the day. However, the computers are always ready to trade aggressively. Therefore, if there is a strong breakout up or down, day traders should be prepared for a swing trade. Without that, they will expect a trading range day with mostly scalps.
Yesterday’s setups
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. 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 is rallying to the top of its 6 month trading range. Yesterday closed above the October/December double top.
Today will probably have another bull close above that resistance. Traders will therefore look for a test of the next resistance level. That is the August 6 top of the 6 month range.
A more important resistance level is the June 25 high (not shown) of 1.1413. This rally is strong enough to make traders believe that it will reach that magnet within a couple months. The odds are increasing that the 2 year bear trend has ended.
Overnight EURUSD Forex trading
The 5 minute chart of the EURUSD Forex market has rallied 35 pips overnight in a tight bull channel. That means the bears are not selling and that traders are buying at the market.
Because the bars are small and many have prominent tails, the bull trend will probably evolve into a trading range within a hour or so. Once it does, the bulls will switch to buying pullbacks and scalping. Also, if the range is at least 20 pips tall, the bears will begin to sell rallies, hoping for 10 pip scalps.
Today is the final day of the year and the decade. While it traditionally is quiet, there is an increased chance of a surprisingly strong move up or down, especially in the final hour. Much more likely is that today will become a relatively tight trading range for the rest of the 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
After a buy climax on the open, the Emini sold off back to yesterday’s low and the open. It then reversed up strongly to a new high at the end of the day. Today is therefore a High 1 bull flag buy signal bar for Thursday.
While the Emini has sold off for 3 days, the month, year, and decade all are closing very close to their highs. That increases the chance of at least slightly higher prices over the next few months. But, the current pullback could last a couple of weeks before the bull trend resumes.
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.
Al, your thoughts on ledge bottom 42-48 after eod strong bull? Is this still a magnet next few days? Thanks
When the reversal up is that violent, it is essentially a Surprise Breakout. That means that the market is moving on to something new and everything else is less important. Therefore, in this case, I would ignore the ledge.