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Emini Buy Climax Late in Bull Trend

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Trading Update: Thursday December 14, 2023

S&P Emini pre-open market analysis

Emini daily chart

  • The Emini formed a large buy climax bar, during yesterday’s FOMC rally. The rally tested the July high, a target for the bulls.
  • Because yesterday was climactic, the odds favor profit-taking and sideways trading for a few days. Today will probably be a trading range or a bear-trend day.
  • The market is very far from the moving average late in a bull rally. This will increase the odds that the market will test and reach the moving average over the next few weeks.
  • It is important to realize that buy climaxes typically do not lead to bear trends. Instead, they often lead to trading ranges and sideways trading.
  • Because yesterday was so bullish traders must be prepared for a possibly surprise bull trend day today. However, there is only around a 20 – 25% chance of that happening.
  • Overall, the odds favor profit-taking and sideways for the next couple of days.

Emini 5-minute chart and what to expect today

  • Emini is up 17 points in the overnight Globex session.
  • The Emini will probably have many sideways trading on the open. This is due to yesterday’s strong buy climaxes following the FOMC rally.
  • There is a 75% chance of two at least two hours of sideways trading beginning before the end of the second hour. There is a 50% chance of follow-through buying on the open, followed by a trading range forming after.
  • There is only a 25% chance of a bull trend from the open today.
  • As I often say, most traders should consider waiting for 6-12 bars before placing a trade unless they are comfortable with limit order trading and making quick decisions.
  • Today will probably disappoint the bulls, which means that yesterday’s high will likely be resistance, and the market will have a hard time closing above it.
  • If today goes up, traders should expect the gap to close.

Emini intraday market update

  • The Emini has gone sideways for the first three hours of the U.S. Session.
  • Today is likely to be a trading range day due to the climatic buying pressure yesterday.
  • Traders should continue to pay attention to the open of the day, as it will likely be a magnet for most of the day.
  • The bears failed to close the gap. This is a magnet, which means traders should be open to the possibility of a sell vacuum test of yesterday’s close at some point today.
  • As of bar 39, the channel up is tight, which lowers the probability of the market falling below the low of the day. The bears must first develop more selling pressure.
  • It is important to realize that the market is near the bar 4 high of the day. This area will likely act as resistance, which means that the market could stall here.

Yesterday’s Emini setups

SP500 Emini 5 Min Chart Trading Range Then Bull Breakout on FOMC

Al created the SP500 Emini charts.

Here are reasonable stop entry setups from yesterday. I show each buy entry bar with a green arrow and each sell entry bar with a red arrow. Buyers of both the Brooks Trading Course and Encyclopedia of Chart Patterns have access to a near 4-year library of more detailed explanations of swing trade setups (see Online Course/BTC Daily Setups). Encyclopedia members get current daily charts added to Encyclopedia.

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. These therefore are swing entries.

It is important to understand that most swing setups do not lead to swing trades. As soon as traders are disappointed, many exit. Those who exit prefer to get out with a small profit (scalp), but often have to exit with a small loss.

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

EURUSD Forex daily chart

EURUSD Daily: Surprise Breakout, 2nd Leg Up Likely
  • The EURUSD formed a strong upside breakout over the past two trading days, trapping the bulls out of a winning trade and the bears into a losing trade.
  • The selloff to the December low was strong enough to increase the odds of a second leg down. However, yesterday’s bull breakout (December 13th) was strong enough that bears began to buy back shorts, and bulls began to buy to establish longs.
  • Although the bears formed a wedge top with the November 29th high, it was likely to be a minor reversal, due to the channel up being tight.
  • While the reversal up today is strong, it is possible vacuum test of resistance, the November high.
  • The odds favor a second leg up after today. However, the pullback could be deep.
  • The bears are hopeful the recent rally will become a double top with the November high and lead to a test of the December low. This is unlikely without more selling pressure.
  • Overall, the odds favor a second leg up, however, the pullback could be deep.

Summary of today’s S&P Emini price action

SP500 Emini 5 Min Chart Wedge Bull Flag Then LH DT and Trading Range

Al created the SP500 Emini charts.

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

Al Brooks and other presenters talk about the detailed Emini price action real-time each day in the BrooksPriceAction.com trading room days. We offer a 2 day free trial.

Charts use Pacific Time

When times are mentioned, it is USA Pacific Time. The Emini day session charts begin at 6:30 am PT and end at 1:15 pm PT which is 15 minutes after the NYSE closes. You can read background information on the market reports on the Market Update page.

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