Emini and Forex Trading Update:
Tuesday December 10, 2019
I will update again at the end of the day.
Pre-Open market analysis
The Emini again tested the high from 2 weeks ago yesterday and it reversed down. The bears are hoping that Friday will form a double top with that high. Today is a sell signal bar for the double top.
Last week’s big bear bar on Monday was a Bear Surprise Bar. Traders expect a 2nd leg sideways to down. This is true even when there is a rally back to above the top of the Bear Surprise Bar, like on Friday. While that lowers the probability of the 2nd leg down, the bears still have a 50% chance, especially with the potential of a big move up or down after tomorrow’s FOMC news.
The bulls see last week as a bear trap. They expect a new all-time high and they want the year to close on its high. However, their reversal up is stalling at the high from 2 weeks ago. Traders are deciding between the breakout and the double top. They might wait for Wednesday’s FOMC announcement before creating a breakout up or down.
Both Friday and yesterday were small and had mostly trading range price action. That increases the chance of more sideways trading today. But the odds continue to at least slightly favor higher prices over the next month.
Overnight Emini Globex trading
The Emini is up 6 points in the Globex session. However, it sold off overnight and reversed up 25 points over the past 2 hours. This increases the chance of a continued reversal up in the day session today.
Also, there were two ledges yesterday around 3145. A ledge is 4 or more bars in a tight trading range with exactly the same high. It is a strong magnet and the Emini usually goes above the ledge later in the day or on the next day. Those ledges further increase the chance of a continuation of the Globex rally today.
Tomorrow’s FOMC announcement is a potential surprise. Markets tend to get neutral ahead of surprises. The Emini has been sideways for 2 days. It therefore might already be neutral.
Furthermore, there has been a lot of trading range price action over the past 5 days. Day traders should expect more trading range price action, even though there will probably be a rally to above the 3145 ledge tops.
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 neutral. When you look at it, there is no sense that the price is terribly wrong and it needs to quickly move up or down to a more fair price. It is in the middle of a 5 week trading range, and that range is in the middle of a 5 month trading range.
The bears are hoping for a reversal down from last week’s failed breakout of the top of the range. But the sell signal bar 3 days ago was weak and there was no follow-through selling after the one day reversal down.
The bulls hope that Friday’s selloff was just a pullback from what they hope will be successful breakout above the range. However, the breakout was small and yesterday was a weak buy signal bar.
The October rally was strong enough to have a 2nd leg sideways to up. So far, the 2nd leg is sideways.
The bear trend line is now below the October high. That is one of the targets, and the EURUSD can get there by simply continuing sideways. That would achieve the minimum goal for the bulls after their October 1 nested wedge bottom.
Traders are waiting for a sign that either the bulls or bears are taking control. In the meantime, they are looking for 1 – 3 day trades and betting on a continuation of the range. Upcoming potential catalysts for a breakout are tomorrow’s FOMC announcement, this weekend’s China tariff decision, and, most importantly, clarity on Brexit.
Overnight EURUSD Forex trading
The 5 minute chart of the EURUSD Forex market rallied to above yesterday’s high overnight. That triggered a buy signal on the daily chart for a reversal up from Friday’s pullback.
However, today only went 6 pips above yesterday’s high and it then pulled back below the high. In addition, yesterday was only a doji bar, which is a weak buy signal bar. Finally, the overnight range has only been 22 pips. Consequently, day traders are continuing to look for reversals and 10 pips scalps as they wait for a breakout up or down. There is no sign yet that one will come today.
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 reversal up from below yesterday’s low, today entered a trading range. It closed near the open and therefore today is not a strong buy signal bar for tomorrow.
Tomorrow’s 11 am PST FOMC announcement is the final one of the decade. It could lead to a big move up or down. But even if the Emini sells off for a few days, the bull trend on the weekly chart is strong. Traders should expect a new high within a month or two.
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.
