Emini and Forex Trading Update:
Wednesday December 2, 2020
I will update again at the end of the day.
Pre-Open market analysis
The Emini gapped up on the monthly chart yesterday. A gap up to a new all-time high on the monthly chart is rare. I don’t know if it has ever happened before in the history of the Emini or the S&P futures market. That makes it more emotional, which increases the chance of either a strong leg up from here or of a reversal down.
It is important to note that while the gap was big on the daily chart, it was small on the monthly chart. Small gaps typically close before the end of the bar, which means before the end of the month.
When there is a big gap up above major resistance, like on the daily chart, the Emini often goes sideways for a few days before traders decide if the bull trend will continue or reverse. With yesterday having a a close near the open, there is indecision. That increases the chance of more sideways trading again today. However, because the Emini is overbought and gapping up, there is an increased chance of a series of trend days in either direction.
Overnight Emini Globex trading
The Emini is down 11 points in the Globex session. That is just above the November high. Remember, the gap on the monthly chart was small, and it will therefore probably close before the end of the month. That does not mean that December will reverse down. It only means that it might test below the November high. It could then continue sideways or resume up.
While yesterday is a sell signal bar for today, it is a weak doji bar in a bull trend. That reduces the chance of a big bear trend day. But it had a small bull body, and that reduces the chance of a big bull trend day.
The past 4 days each reversed. Most days over the past month have had at least one swing up and one swing down. Day traders will expect that again today.
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. Buyers of both the Brooks Trading Course and Encyclopedia of Chart Patterns have access to a much more detailed explanation of the swing trades for each day (see Online Course/BTC Daily Setups).
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.
If the risk is too big for your account, you should wait for trades with less risk or trade an alternative market like the Micro Emini.
EURUSD Forex market trading strategies
The EURUSD Forex market on the daily chart formed a big bull trend bar yesterday, and it closed far above the top of the 4-month trading range. The bulls hope that it will lead to a 400-pip measured move up and a test of the February 2018 high at around 1.25.
The day after a breakout is important since all strong breakouts fail at least 40% of the time. If today is a 2nd consecutive big bull day closing on its high, traders will expect the rally to reach that February 2018 high. So far, today is a small day that is trading around the open. It is therefore a doji bar on the daily chart. The odds of higher prices will continue to be better than 50% if today does not have a bear body. If today is a big bear day closing on its low, this breakout will probably fail.
What happens most often is a follow-through bar that is somewhat neutral. That means a bar that is not strongly bullish or bearish. If that is the case, it will favor higher prices. But it will be less certain than if today is a big bull trend day.
Overnight EURUSD Forex trading
The 5-minute chart of the EURUSD Forex market overnight rallied a little, sold off a little, and is now back around the open. So far, it is a trading range day. Day traders are scalping in both directions.
While it is still possible that today could be a big trend day up or down, it probably will not be. But with yesterday as bullish as it was, day traders will probably have an easier time making money by buying. Unless the bears get a strong, sustained selloff, traders expect higher prices over the next several days.
Summary of today’s S&P Emini futures price action and what to expect tomorrow
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. Buyers of both the Brooks Trading Course and Encyclopedia of Chart Patterns have access to a much more detailed explanation of the swing trades for each day (see Online Course/BTC Daily Setups).
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.
If the risk is too big for your account, you should wait for trades with less risk or trade an alternative market like the Micro Emini.
End of day summary
Today closed the gap on the monthly chart on the open, but not on the daily chart. The Emini rallied in a weak bull trend and then was sideways for several hours. The bulls got brief trend resumption up and closed near the high.
Since today is a bull day and it closed near its high, it is a High 1 buy signal bar for tomorrow. With the daily, weekly, and monthly charts being in bull trends, the odds favor higher prices. But most days for over a month have had at least one swing up and one swing down. Also, most have had a lot of trading range price action. Day traders will expect more tomorrow.
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.
