Emini and Forex Trading Update:
Monday December 30, 2019
I will update again at the end of the day.
Pre-Open market analysis
Friday was a bear bar and therefore a sell signal bar for today. There is a parabolic wedge buy climax on the daily chart. It is at the resistance of the top of the 2 month bull channel and the 3250 Big Round Number.
The bears want this year to do the opposite of last Christmas. However, this week is also the end of a very strong decade. Consequently, the odds are against a big selloff from here. The bears will probably need at least a micro double top before they can get more than a 1 – 2 week pullback.
Since the bulls have been strongly in control for a decade, they are trying to get the decade to close at a new high. The current rally is strong enough so that the Emini will probably be sideways to up through the end of the year (tomorrow).
Was Friday’s selloff strong enough to have a 2nd leg down today? Will some bulls take profits just before the end of the year? Both are possible, but the downside risk is currently small.
Overnight Emini Globex trading
The Emini is up 4 points in the Globex session. The bulls will try to prevent today from trading below Friday’s low. They do not want the sell signal to trigger on the daily chart.
Because the bull trend is so strong on the daily chart, there might be more buyers than sellers below Friday’s low. Therefore, even if the sell signal triggers, traders will watch for a possible reversal up from below Friday’s low.
It is important to remember that the bulls have been strong for a decade and for a year. The odds are that they will be able to maintain that strength for the remaining 2 days of the decade. They do not need a big rally. They will be satisfied with a quiet, sideways finish to the decade.
Because of the traditional holiday lack of energy, the odds favor a lot of time in tight trading ranges today and tomorrow. However, there will still probably be at least one brief sharp move up or down, like on Thursday and Friday.
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. 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 is at the top of a 6 month trading range. Traders want to see consecutive closes above the top of the range before they conclude that the breakout will succeed.
Friday’s rally was strong enough to make at least a small 2nd leg sideways to up likely. Also, Forex markets have an increased chance of breaking out or reversing around the 1st of the year. Consequently, traders will be ready for a big move up or down over the next couple weeks.
It is important to remember that markets have inertia. They resist change. I have talked about this repeatedly over the past 18 months. I have kept saying that reversals were more likely than breakouts in channels and trading ranges.
That is still true today. Until there is a breakout, there is no breakout. But the bulls have their best chance over the next couple months in more than a year.
Overnight EURUSD Forex trading
The 5 minute chart of the EURUSD Forex market rallied above the December 13 top of the 6 month trading range overnight, but then reversed. The day’s range has only been 30 pips. There is therefore no energy up or down. So far, today is a small day.
The bears want the day to close on its low. It would then be a sell signal bar for tomorrow for a failed breakout. Today would be a higher high double top with the December 13 high. If today is a big bear day closing on its low, more traders will be willing to bet on a reversal.
Alternatively, if today rallies strongly and closes far above Friday’s high, traders will wonder about a successful breakout. With the small range and the traditional lack of energy around the holidays, today will probably remain a small trading range day. It would therefore not be significant on the daily chart. Traders would then look for guidance over the next few days.
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
The Emini sold off strongly on the open. When that happens, traders expect a climactic reversal up for at least a couple hours. That is what happened today.
By going below yesterday’s low, the Emini triggered a sell signal on the daily chart. The bears want follow-through selling tomorrow, but the bulls want a failed breakout and a reversal up. The selloff was strong enough to make at least at little bit lower likely this week.
Tomorrow is the final day of the month, year, and decade. The Emini is in strong bull trends on all of those time frames. Traders know that a strong close tomorrow will slightly increase the chance of higher prices over at least the next few days. Therefore, the bulls will try to get tomorrow to close at a new all-time high.
However, that is probably too far above today’s close for the bulls to get there. But if the Emini is within 10 points in the final hour tomorrow, traders should be ready for a possible Buy The Close rally to a new high.
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.
