Emini and Forex Trading Update:
Friday December 27, 2019
I will update again at the end of the day.
Pre-Open market analysis
The Emini had 3 small sideways days prior to yesterday. But yesterday’s late bull breakout changed the price action. It increased the chances of a stronger bull trend today and possible through the end of the decade on Tuesday.
Gaps on the monthly chart are unusual. The Emini had a gap up in October. With the bull trend as strong as it is, traders need to wonder if next year will gap up. That would be a gap on the yearly chart, which would be even more unusual.
I suspect that there has never been an open gap on the yearly chart. Consequently, even if next Thursday were to gap up to a new high, the gap would probably close within a few months. However, it would be another sign of just how strong the ongoing buy climax has been.
The bull trends on the daily and weekly charts are strong. The bulls are trying to have the year and decade close on their highs at a new all-time high. Therefore, there is an upward bias for the remaining 3 days of the decade.
Overnight Emini Globex trading
The Emini is up 8 points in the Globex market. It will therefore probably gap up. Yesterday’s strong close increase the chance of a bull trend today. The bulls are trying to finish the strongly bullish decade as strongly as they can. The odds continue to favor sideways to up through yearend next Tuesday.
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 has a big bull trend bar so far today. It is reversing up from a higher low test of the December 6 low. The bulls want a break above the December 13 top of the 6 month trading range. If they get 2 closes above that high, the rally will probably continue up to the June high above 1.14. In addition, it would increase the chance of the rally completely reversing the 16 month bear channel that began in September 2018.
The bears know that markets resist change. They therefore expect the trading range to continue. They will try to get a reversal down from the December high.
But even though markets resist change, 16 months in a bear channel is unusual. Traders expect a bull breakout soon. The price action over the past 3 months is the most bullish in 2 years. Consequently, the odds are increasing that the rally will continue up to 1.18 over the next 6 – 12 months.
Overnight EURUSD Forex trading
The 5 minute chart of the EURUSD Forex market has rallied in a tight bull channel overnight. Day traders have only been buying.
However, the legs up over the past 2 hours are becoming smaller and briefer. This loss of momentum means that the bull channel will probably transition into a trading range soon.
If it does, the bears will begin to sell reversals down from the top. The bulls will continue to buy, but they will be more inclined to buy 10 – 20 pip pullbacks rather than at the market. Furthermore, they will be starting to take some profits at the high.
These changes in behavior are what typically create a trading range. But because of the bull trend, the EURUSD will probably be sideways to up 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 gap up to another new high, the Emini sold off strongly on the open. The bulls bought the sell climax on the open but the bears got trend resumption down at the end of the day.
Today was a bear bar on the daily chart. Since there is a parabolic wedge top on the daily chart, today is a sell signal bar for Monday. The Emini might try to do the opposite of what it did at the end of last year. Last year crashed down and rallied strongly. This year’s crash up might reverse down.
Traders still expect an attempt to close the year and decade on the high on Tuesday. There might be some profit-taking on Monday or Tuesday, but the downside risk is currently small.
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.
