Emini and Forex Trading Update:
Friday December 11, 2020
I will update again at the end of the day.
Pre-Open market analysis
Yesterday traded below Wednesday’s low, which triggered an OO sell signal on the daily chart. But yesterday reversed up and closed with a small bull body. It is a weak High 1 bull flag buy signal bar for today.
Traders are deciding if Wednesday is the start of a 2-week pullback, or if yesterday is a part of a pause in the bull trend. There is a 50% chance for either outcome. The OO sell signal is good for the bears and the 3-week tight bull channel is good for the bulls.
When there is confusion, there is an increased chance of a trading range. It reduces the chance that today will be a strong trend day up or down. With yesterday being mostly sideways, traders expect more trading range trading today. However, the daily ranges are big enough for at least one swing up and one swing down.
Today is Friday so weekly support and resistance can be important, especially in the final hour. The bulls want another weekly close at a new all-time high. The bears, however, want a close below the open of the week so that this week would have a bear body. That would increase the chance of lower prices next week, especially if the week closes on its low.
Day traders should switch to trading the March Emini contract today.
Overnight Emini Globex trading
The Emini is down 25 points in the Globex session. It might gap down below yesterday’s low. If so, the gap will probably be small. Small gaps typically close in the first hour.
Because of the sell signal triggering yesterday on the daily chart, there is an increased chance of a bear trend day today. However, with yesterday being a trading range day on the 5-minute chart and having a small bull body on the daily chart, there is uncertainty. Yesterday was a bad entry bar for the bears. This increases the chance of more sideways trading today.
Even if today is another sideways for most of the day, there is an increased chance of a strong trend up or down in the final hour. The bulls want today to close above the week’s open. However, that is about 50 points above the current Globex price and unlikely. At a minimum, they would like the week to close far above the low of the week. That would reduce the chance of lower prices next week.
The bears are hoping that this is the start of a move down to below 3500. They would like the week to close on the low of the week. This week would then be a strong sell signal bar on the weekly chart, and it would increase the chance that the selloff has begun.
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
The EURUSD Forex market on the daily chart has been sideways after last week’s big bull breakout. The bulls see this small tight trading range as a bull flag. Yesterday was a big bull day. The bulls hope that it will be the start of a breakout of the bull flag. But the bull flag had 4 bear bars. That usually does not lead to a resumption of the bull trend without first going sideways for more bars.
Today traded about yesterday’s high, but sold off. So far, today is a big bear bar on the daily chart. That is bad follow-through and it increases the chance that the tight trading range will add more bars (days).
However, the day is not yet over. If the bulls can get it to close above the open, traders will expect higher prices next week.
The bears hope that today is forming a double top with last week’s high. They want a reversal down, at least to the September 1 high, which is the breakout point. They will have a better chance if today closes on its low.
It is important to remember that today is Friday. Last week was a big bull bar on the weekly chart, and a breakout to a 2-year high. This week is the follow-through bar. The more bullish it is, the greater the chance of higher prices next week. If the week closes on its low, it will be a sell signal bar for next week.
The overnight reversal down stopped right at the open of the week. The EURUSD has been trading in a 20-pip range around the open for 5 hours. Traders are clearly paying attention to the weekly chart today. This will likely continue all day.
Overnight EURUSD Forex trading
The 5-minute chart of the EURUSD Forex market reversed down from above yesterday’s high to the open of the week. It has been in a 25-pip range for 5 hours. Day traders are scalping reversals above and below the open.
This could continue all day. If it does, the week will close very near the open. It will have either a small bull or bear body. The bigger the bull body, the more hopeful the bulls will be for higher prices next week. The bigger the bear body, the more the bears will expect a reversal down next week.
If the week has even a small bear body, it will reduce the chance of higher prices next week. But if it ends up with a small bull or bear body, it will not offer much guidance for next week. It will increase the chance that the 7-day tight trading range on the daily chart will continue at least into early next week.
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 reversed up strongly from a wedge bottom at the middle of the day today. Yesterday was a bull bar on the daily chart, which was a weak entry bar for the OO sell signal. Today was a 2nd consecutive bull bar. That increases the chance that the sell signal will fail. Today is a buy signal bar for Monday.
However, this week was a bear bar on the weekly chart. It is a sell signal bar for a wedge rally. But it had a prominent tail below, making it a weak sell signal bar.
Traders are deciding if a pullback to below 3500 has begun. There might be one more new high first. With a buy signal on the daily chart and a sell signal on the weekly chart, there is confusion. Confusion is a hallmark of a trading range, and it increases the chance that the Emini will continue in its 9-day tight trading range at least a little longer.
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.
E-mini. Could you please confirm, use only the front month contract symbol for trading all time frames, for example, 5 minute, daily, weekly, monthly? And use the continuous contract symbol only for charting, not entering and exiting trades?
The reversal after the 7:15 am Pacific bar on the 5 minute surprised me because I was on the continuous contract symbol and the EMA was far above. On the front month contract symbol, the E-mini reversed at the EMA (same time).
Thank you very much for clarifying.
I use the continuous charts for this site for all time frames.
There are usually only minor differences between the 2 contracts. More than 95% of the bars and patterns are identical. I prefer trading contracts that have more volume.
On rollover day (Thursday), I trade the expiring December contract because it always has much more volume.
Today is Friday, and I started trading March, which now has much more volume.
Note that the prices in March are lower. It is a futures contract, which means a prediction of the future. It tells us that traders believe that the Emini will be lower in March.