Emini weak Christmas rally testing 2017 close
I will update again at the end of the day.
Pre-Open market analysis
The Emini rallied in a weak bull channel yesterday. It then reversed down from just below the close of last year. Since it closed near its low, it is a good sell signal bar for today. Today will probably fall below yesterday’s low to trigger the sell signal.
However, the Emini has been sideways for 5 days. In addition, the close of last year will continue to be a strong magnet for the rest of the year. Therefore, there is a reduced chance of a big selloff from here. The bulls are still hoping that the past 2 bear days are forming a pullback from a reversal up from the October low.
Overnight Emini Globex trading
The Emini is up 6 points in the Globex market. While yesterday was a bear trend reversal, the weekly chart has been sideways for 8 weeks. Consequently, there is nothing to reverse. Therefore, there might be more buyers than sellers below yesterday’s low.
I have been saying for 2 months that the Emini might stay around last year’s close until the final day or two of the year. Then, decide whether this year will be minimally up or down. There is no evidence to the contrary. Traders do not expect follow-through from the prior day. Therefore, today is as likely to rally as selloff.
Furthermore, the daily ranges have been big. This has allowed swing traders to make a nice profit every day. This will continue indefinitely.
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. 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 EURUSD daily Forex chart has been in a tight trading range for 2 weeks at the apex of a triangle. Therefore, there is always a credible buy and sell setup. It is still in Breakout Mode.
The EURUSD daily Forex chart broke slightly above the triangle last week, but pulled back into it. It is still in Breakout Mode. The probability of a successful bull breakout is the same as for a bear breakout.
When the market is in a trading range for a long time, traders expect a measured move up or down. Since the trading range is 300 pips tall, the choice is between a rally to 1.18 or a selloff to 1.09.
Until there is a breakout, there is no breakout. Traders are looking for brief, small trades. They correctly expect reversals every 1 – 3 days.
Once there is a big trend bar or 2 – 3 consecutive trend bars with strong closes, they will switch to swing trading. However, many would take partial profits at the top or bottom of the triangle, fearful of a reversal. The bulls will try to create a double bottom at 1.12. The bears would want a double top at 1.15. Consequently, a measured move to either 1.18 or 1.09 will likely take at least a couple of months.
Overnight EURUSD Forex trading
The EURUSD 5 minute Forex chart has been in a 30 pip trading range overnight. Day traders will continue to scalp reversals. When there is a breakout, they hold for 30 – 40 pips and then take profits. They are unwilling to swing trade until there is a very strong breakout with follow-through.
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. 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.
The Emini sold off from a double top on the open. It then traded down in a broad bear channel. By falling below Wednesday’s low, the Emini triggered a sell signal on the daily chart.
Despite repeatedly falling below that low, the bulls kept getting reversals up. This means that the bears did not have a strong conviction about their sell signal. However, the day closed slightly below yesterday’s low, which increases the chance of lower prices.
Traders are thinking about the end of the year. With last year’s close nearby, the Emini will probably have a hard time going very far up or down. This year will likely close around last year’s close.
See the weekly update for a discussion of the price action on the weekly candlestick 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 Intraday Market Update page.
