Emini and Forex Trading Update:
Tuesday December 1, 2020
I will update again at the end of the day.
Pre-Open market analysis
After a strong November, the Emini today will probably gap up on the 1st day of December. It could gap above the November high. That would create a rare gap up to a new all-time high on the monthly chart. While I haven’t checked, this might be the 1st time in history that this has happened on either the Emini or the S&P futures contracts.
A gap up on the monthly chart always comes with a gap up on the daily chart. Whenever there is a gap up, there is an increased chance of a trend day. It can be in either direction.
When the gap is up and there is a trend, a bull trend is slightly more likely. The bigger the gap, the more likely there will be a bull trend.
If there is a series of strong trend bars on the open in either direction, there will be an increased chance of a trend day. Because this is happening at the top of a buy climax and in the final month of the year, there is also an increased chance that a trend day today could be followed by several more trend days in the same direction.
Overnight Emini Globex trading
The Emini is up 34 points in the Globex session. It should gap above yesterday’s high and it might gap above the November high to a new all-time high.
Since the Emini is doing something very unusual, there is an increased chance of it continuing to do something extreme. That means a trend in either direction. If there is a series of strong trend bars in either direction, traders will look for a trend day.
The bears want the gap up to fail. They want a selloff to far below yesterday’s high.
However, the bulls want today to be the start of a strong rally into 2021. If they can get a strong bull trend day, traders will wonder if today is the start of a strong leg u,p and a strong final month of the year.
What happens if today is a small, sideways day? Then traders will conclude that the market is putting the decision off until tomorrow or later in the week. It is common for the market to go sideways for 2 to 3 days after a gap up above, or below a key price before resuming or reversing.
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 bear reversal bar yesterday after a strong breakout above the September 10 high. But today so far did not fall below yesterday’s low to trigger the sell signal. The bulls are hoping that yesterday was just a pullback from Friday’s strong breakout above the September 10 high.
Even though yesterday was a bear reversal bar, it was the 2nd consecutive close above that resistance. That increases the chance that the rally will continue to above the September 1 two-year high.
But if today or tomorrow reverses down to below yesterday’s low, the bears will have a micro double top. That would also trigger the sell signal for a wedge rally to a double top with the September 1 high. Traders would then look for a couple legs down to at least the November 23 low.
Overnight EURUSD Forex trading
The 5-minute chart of the EURUSD Forex market opened above yesterday’s low and reversed up in a tight bull channel. There was a 20-pip pullback 5 hours ago, and that could be the start of a trading range. The bears will start to look for scalps on reversals down. If a reversal down is strong, the bears will hold for a swing down. They will hope that today will form a reversal day, and a double top with yesterday’s high.
However, the day is still a bull trend day and it is therefore easier to make money buying pullbacks. The bulls have already accomplished all that they need to do. That reduces the chance of a big rally from here.
They prevented the sell signal on the daily chart from triggering, and they reversed most of yesterday’s selloff. They would simply like today to close near its high. If it closed above yesterday’s high, that would also be the 1st close above 1.20 in over 2 years. Today would then be a buy signal bar for tomorrow.
What happens if today closes in the middle of its range? The bulls would be disappointed and the bears will be hopeful. It would increase the chance of another sideways day. The chart would be in a small Breakout Mode pattern. Traders would still be deciding between a break above the September 1 high and a reversal down.
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 was the 1st day of December and the Emini gapped up today above the November high. There is now a rare gap up on the monthly chart to a new all-time high. The bulls hope this is the start of a strong rally that will have at least a couple legs up and reach 4,000, which is about a measured move up above the 4 month trading range.
When there is a gap above major resistance, like to a new high, the Emini often goes sideways for a few days as traders decide if the breakout will succeed or fail. If there is a gap down tomorrow or anytime soon, the bears will have an island top. Because it would be at a new high, it would have an increased chance of leading to a swing down. This is also true if there is a big bear day this week that closes today’s gap.
Today rallied on the open but reversed at the end of the day. It closed in the middle of the range. This is like most days in November, which closed in the middle of the range or near the open.
Because today was mostly sideways, there is an increased chance of more sideways trading tomorrow. But because the Emini is breaking out at the end of the year, there is an increased chance of a series of trend days in either direction.
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
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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.
