Emini and Forex Trading Update:
Monday December 14, 2020
I will update again at the end of the day.
Pre-Open market analysis
The Emini triggered an OO sell signal when Thursday traded below Wednesday’s low. But both Thursday and Friday were bull days. That increases the chance that the sell signal will fail. Friday is a buy signal bar for today.
However, last week is a sell signal bar on the weekly chart for this week. When there are conflicting signals, there is confusion. That usually results in sideways trading. The Emini already has been in a tight trading range for 9 days. That will probably continue for at least another day or two.
Overnight Emini Globex trading
The Emini is up 25 points in the Globex session. Today will probably gap above Friday’s high. That would trigger a High 1 buy signal on the daily chart. However, the bears see the chart as still on its OO sell signal, as long as the Emini stays below the top of the OO, which is the December 9 high.
As I said, when there is confusion, the market usually goes sideways. It has already been going sideways for 9 days. Sideways on the daily chart increases the chance of trading range trading on the 5-minute chart. But the daily ranges have been big enough for swing trades up and down.
Can today be a big bull or bear trend day? Of course, but with most days for 2 months having at least one reversal, day traders will expect at least on reversal again today.
Finally, when the Emini is near its all-time high, there is an increased chance of a new all-time high. There have been many new all-time highs since August. The current all-time high is only about 20 points above the Globex high. Therefore, there might be another all-time high today. The reason why this one would be a little more important, is that it would end the OO sell signal and trigger an OO buy signal. The would increase the chance of higher prices.
Friday’s setups
Here are several reasonable stop entry setups from Friday. 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 has rallied for 2 months. It is breaking above a weak bull flag. The bulls want the rally to continue up to the February 2018 high with only brief pullbacks. However, the daily and weekly charts are more consistent with a bigger pullback before the rally reaches its target.
If the EURUSD reverses down from here, there will be a double top. The reversal would probably be minor, and just add more bars to the 2-week tight trading range. There would then likely be at least one more brief leg up.
But if the rally resumes for several days to at least 50 pips above the December 4 high, and then reverses, there would be a wedge top. Since there would also be a bigger wedge top on the weekly chart, there would be a nested wedge top. That is a reliable reversal pattern. Traders would expect a couple legs down on the weekly chart. The result could be a couple months of pulling back to support at around the November 4 low.
Traders expect higher prices soon, but they will look for a reversal for a couple months before the rally reaches the February 2018 high.
Overnight EURUSD Forex trading
The 5-minute chart of the EURUSD Forex market has rallied overnight in a tight bull channel. Day traders so far have only been buying.
However, a bull channel usually has a bear breakout. The chart will then transition into a trading range. Once there is a 20-pip pullback, or a trading range lasting a couple hours, day traders will also start to sell reversals down for scalps.
Can today reverse back down to the low of the day? It could, but a reversal will more likely stop at around 1.2140, which was the high on the open, and the start of the channel that began in the European session.
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 rallied on the open but sold off from a small wedge top. It continued down in a Small Pullback Bear Trend. The low of the day was just 2 ticks above the November 9 high.
The bears want a continuation down from a double top with last week’s high. Today is a sell signal bar on the daily chart. IF the bears get 2 or 3 consecutive bear days, traders will conclude that the reversal down to at least 3500 is underway. But today was the 10th day in a tight trading range and that increases the chance of more sideways trading tomorrow.
On the 5-minute chart, today was a bear channel. Since most bear channels break above the bull trend line, traders expect a bull breakout tomorrow. However, they usually evolve into a trading range instead of reversing into a bull trend. Also, after a sell climax day, the Emini usually will have at least a couple hours of sideways to up trading that begins by the end of the 2nd hour. That reduces the chance of another big bear day 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.
Hi, Dr. Brooks,for today’s chart, all the longs(especially the ones under the MA) that are seems didn’t quite reach it’s target, is there way to not loss money in these long set up?