Emini and Forex Trading Update:
Wednesday December 16, 2020
I will update again at the end of the day.
Pre-Open market analysis
The Emini’s low yesterday was above Monday’s low, and its high was below Monday’s high. Tuesday was therefore an Emini inside bar, an inside day.
Since the Emini closed near its high, it is a High 1 buy signal bar on the daily chart. Traders see Tuesday as a sharp pullback from Tuesday’s big gap up. The bulls are hoping that Monday was the start of a leg up to a new high. They want the year to close at a new all-time high.
However, the Emini is now in its third sideways week. Traders have been looking for reversals every few days. That reduces the chance of a big bull trend day today. Also, the day after a Small Pullback Bull Trend Day typically has at least a couple hours of sideways to down trading that begins by the end of the 2nd hour.
While the odds favor another new high this month, December so far is a small bar on the monthly chart. Therefore, the year might close around the open of the month, even if there is one more new high first. December would be a weak follow-through bar on the monthly chart after November’s big bull breakout. It would increase the chance of at least a minor reversal in January.
Overnight Emini Globex trading
The Emini is up 7 points in the Globex session. It therefore might gap above yesterday’s high, which would trigger the High 1 buy signal on the daily chart. However, a small gap typically closes in the first hour and is insignificant.
The all-time high is only about 5 points above the Globex high. The bulls therefore have about a 50% chance of another new high today. They would like a 2nd consecutive big bull day. However, yesterday was a Small Pullback Bull Trend. That typically results in exhaustion. Traders expect at least a couple hours of sideways to down trading to begin before the end of the 2nd hour. Also, the Emini is at the top of a 3-week trading range. That reduces the chance of a big bull day today.
There is an FOMC announcement at 11 am PST today. Day traders should exit positions before the report and wait at least 10 minutes afterwards before resuming trading. There is usually a sharp move up and down within the 1st few minutes, and it typically takes about 10 minutes to know which will lead to a swing. Also, traders should be open to anything after the announcement. That means a bull trend, a bear trend, a reversal, or a trading range.
EURUSD Forex market trading strategies
The EURUSD Forex market on the daily chart broke to a new 2-year high overnight. The bulls want the rally to continue up to the February 2018 major lower high above 1.25, without more than a 2-week pullback.
However, that is unlikely. This is a 3rd leg up on both the daily and weekly charts. A reversal would be from a wedge top, and it would probably lead to a pullback that lasts at least a few weeks.
Also, most of the bars for 3 weeks have overlapped one another and have prominent tails on top. This is not how a chart typically looks if it is going a lot higher from here. It is trading range price action, and increases the chance of a bear leg developing soon.
But the EURUSD has been trending up since March, and therefore traders will continue to look for at least slightly higher prices, until there is a strong sell signal bar, or a big reversal down. There is at least a 50% chance that this rally will begin to pull back to below 1.20 by early January.
Overnight EURUSD Forex trading
The 5-minute chart of the EURUSD Forex market broke strongly above the December 4 high overnight, but it drifted back down to that high over the past several hours. The bulls want today to close far above that breakout point, and on the high of the day. That would increase the chance of a measured move up, based on the height of the 10-day trading range.
The bears always want the opposite. They want the reversal down to continue to a new low. If today is a big bear day on the daily chart, it would be a credible sell signal bar for a wedge top reversal.
What is most likely after a relatively big breakout and a reversal down? Confusion, and that usually results in a trading range. The most likely outcome after the 30-pip selloff is that the EURUSD goes sideways. Then, at the end of the day, the EURUSD will probably close a little above or below the December 4 high.
There is an FOMC announcement at 11 am PST today. That can affect all financial markets. It is better for day traders to exit positions ahead of the report and wait at least 10 minutes before resuming trading.
Summary of today’s S&P Emini futures price action and what to expect tomorrow
End of day summary
The Emini reversed up from a sell climax on the open. It then reversed down from a wedge rally a couple hours later.
Today was an FOMC day. The Emini sold off on the report but then reversed up to anew all-time high. It sold off again to the middle of the day’s range, like most days over the past 6 weeks.
Since it has been rallying for 7 weeks, it will probably go a little higher. But, probably not much higher. It should pull back in January for at least a couple weeks.
See the weekly update for a discussion of the price action on the weekly chart and for what to expect going into next week.
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.
E-mini continuous contract chart (filtered for U.S. session only, not Globex session). Isn’t the all time E-mini high still December 9 @ 3610.50 ? Thank you very much for clarifying.
You mean 3710.50 on December 9. Yes, that “was” the All Time High (ATH) on the Emini 12-20 contract which is now history.
The continuous chart should give you -8.25 for the Emini 03-21 contract, so ATH on Dec 9 is now adjusted to 3702.25 – which is also history with today’s high of 3704.50 giving a new All Time High (day session). The current Globex has exceeded that too by a large margin!! Santa Claus rally? : )
Yes, 3710.50, thank you for correcting the error (wishful bear…thinking).
I see the opposite: On my trading platform, TD Ameritrade – thinkorswim (TOS):
• Continuous contract TOS symbol /ES (TradeStation @ES), still shows 3710.50 (December 9) and is not adjusted.
• Front month contract TOS symbol ESH21 (March 2021) shows 3702.25 (December 9).
Wondering if other TOS traders are experiencing similar issues?
Thank you very much for responding. I appreciate it.
When is it the 10 % down are coming?
If it’s going to come, it should begin by early January. I have written a few times that there is an increased chance of political surprises after the Georgia election on January 5.