Emini and Forex Trading Update:
Thursday December 24, 2020
I will update again at the end of the day.
Pre-Open market analysis
It is important to note that today closes at 10:15 am PST.
Yesterday was a small bear reversal day on the daily chart, with Emini momentum falling, and it is a sell signal bar for today. But since it is coming in the middle of a 4-week trading range, it is not strongly bearish. Traders expect reversals every few days. That will change if the bears can get a strong selloff for a couple more days.
The bulls want the Emini to close on the high of the year next week, and then gap up on January 4. There would then be a gap up up on the daily, weekly, monthly, and yearly charts. I do not know if there ever was a gap up on the yearly chart of the S&P. There is currently a 50% chance that the year close on the high, and a 30% chance that there will be a gap up in January, above the 2020 high.
However, the Emini is at the top of its December trading range, There is also a 50% chance, that the Emini will end the year 100 points or more down from the high. Whether the year closes on its high or not, traders should expect a reversal down to below 3500 to begin by early January.
What is taking place between now and next Thursday is a fight over how the year will close. This is the holiday season, and the daily ranges tend to be smaller. There also is typically more trading range trading on the 5-minute chart.
But because we are now near the end of the year, and markets often make big moves near the end of time frames, there is an increased chance of one or two big trend days by the time 2020 trading ends next Thursday.
Overnight Emini Globex trading
There is an early close today. The Emini session ends at 10:15 pm PST.
The Emini is up 2 points in the Globex session. When there is an early close, the Emini usually either has only one swing or forms a trading range day. Also, if there is a swing, the day’s range is typically small, because there are 3 fewer hours of trading. Traders will look for a sign of a swing up or down in the 1st hour.
Normally when a day ends with a sell climax, traders expect a couple hours of sideways to up trading to begin by the end of the 2nd hour on the next day. That further reduces the chance that today will have a big range.
Day traders will look for signs on an early trend. If instead there is an early trading range, many traders will stop trading because there would not be much time remaining for a trend.
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
Today’s high in the EURUSD Forex market so far is below yesterday’s high, and today’s low is above yesterday’s low. Today is therefore a inside day. It is the 2nd consecutive inside day. If it remains an inside day, there will be an ii pattern on the daily chart, which is a Breakout Mode pattern.
When there is a breakout above an ii late in a bull trend, it typically does not get far before reversing. It usually is the Final Bull Flag.
Strong rallies often end with an ii. Therefore, a breakout below today’s low would trigger a credible sell signal. Traders would look for about TBTL (Ten Bars and Two Legs) sideways to down.
If today goes above yesterday’s high, or below yesterday’s low, there would be no ii. Since yesterday is a weak buy and sell signal bar, today would probably not go far above or below yesterday. This is especially true with most traders leaving around 10:15 am PST today for the Christmas break. Traders appear to be waiting for Brexit news before deciding on the direction of the next move. This should come by the end of the year.
Overnight EURUSD Forex trading
The 5-minute chart of the EURUSD Forex market rallied a little, and then sold off back to near the overnight open. The range is only about 30 pips. Day traders have been scalping for 10 pips.
If there is Brexit news, or any other news, today could trend up or down. Since it is an ii, it is a sign that traders are expecting a big move on the daily chart to begin soon. Today will probably remain an inside day.
Since yesterday is a weak buy and sell setup, if the EURUSD breaks out of yesterday’s range, it will probably not get too far today. That is, unless there is big Brexit news.
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
The Emini sold off in a wedge bear channel after a trading range open, and then rallied to a new high. Today was a bull inside day on the daily chart. It is a buy signal bar for Monday.
The week also formed a High 1 buy signal bar. Next week should trade at least a little higher. However, there is still better than a 50% chance of a selloff to below 3500 beginning within 3 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.
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.
