Emini weak breakout above 3200 Big Round Number

Emini and Forex Trading Update:
Tuesday December 17, 2019

I will update again at the end of the day.

Pre-Open market analysis

The Emini gapped up on the daily and weekly charts yesterday. The bulls are trying to get the year to close on the high after opening near the low in January.

While the Emini rallied early yesterday in a Small Pullback Bull Trend, the bars were small. Also, much of the time was within tight trading ranges. It spent a lot of time around the 3200 Big Round Number, and closed just below. That might therefore be a magnet again today.

Although the odds continue to favor higher prices, most of the days over the past 3 weeks have had a lot of trading range price action. Traders will therefore continue to expect it. It is a self-perpetuating behavior. The more trading range price action, the more traders buy low, sell high, and scalp. That results in a continuation of the behavior.

Overnight Emini Globex trading

The Emini is up 1 point in the Globex session. It will therefore open around the 3200 Big Round Number, which was the dominant price yesterday.

Since the rally over the past 3 weeks is extreme, traders expect that the bulls will take some profits soon. That would result in at least a 1 – 2 day pullback. Traders are deciding if the pullback will begin at 3200 or from slightly higher.

With the bulls trying to win the year and get it to close on the high, traders expect higher prices over the remaining 2 weeks of 2019. However, most of the days over the past 3 weeks have had a lot of trading range price action. Day traders will expect more again today.

Everyone knows that a strong break above 3200 or a strong reversal down can come at any time. But until there is a strong breakout, day traders will continue to look for small profits and reversals.

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 reversed down on Friday after breaking above the October high and the bear trend line. Friday was a surprisingly big bear bar closing near its low. A Bear Surprise Bar typically has at least a small 2nd leg sideways to down.

Yesterday was a bull inside day in a 4 week rally. It was therefore a High 1 bull flag buy signal bar. By the EURUSD today going above yesterday’s high, it triggered the buy signal. But yesterday was a doji inside bar. That is a lower probability buy setup. Friday’s Bear Surprise Bar further lowers the probability of an immediate resumption of the bull trend.

The 4 week rally is strong enough to continue up to the August high and possibly the June high. But the EURUSD will probably have to go sideways to down for a few days before it will strongly break above Friday’s high.

Overnight EURUSD Forex trading

The 5 minute chart of the EURUSD Forex market rallied 45 pips overnight. By going above yesterday’s high, it triggered a buy signal on the daily chart. But remember, the buy setup on the daily chart is not strong. That reduces the chance of a big bull day today.

Since the 6 hour rally was in a tight bull channel, the odds are against a bear trend today. However, the reversal down from a small buy climax over the past hour means that the bulls have begun to take profits. They now will switch to buying pullbacks instead of at the market. In addition, they will be less willing to hold onto longs for swing trades. They will be scalping more.

The small reversal down is probably the start of a trading range. If so, the bears will finally begin to sell reversals down for scalps.

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 was in a triangle until the final hour when it had a small bear breakout. It is failing at 3200 and it might have go lower for a day or two to find buyers.

Tomorrow might gap down. If it does, there will be a 2 day island top. An island top is usually a minor reversal, especially here, where the daily chart is in a strong bull trend.

See the weekly update for a discussion of the price action on the weekly chart and for what to expect going into next week.

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Trading Room

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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.

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