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Emini Bears Want Second Leg Down

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Trading Update: Thursday December 15, 2022

Emini pre-open market analysis

Emini daily chart

  • Emini bears have a wedge top (Nov 11, Dec 1, and Dec 13). The odds favor at least a small second leg down, or sideways.
  • The bears prevented a bull close yesterday after Tuesday’s big bear breakout bar. While yesterday was a bear bar, it is still disappointing for the bears.
  • Yesterday’s bar sold off a couple of points below the 4,000 big round number and found buyers.
  • The problem for the bears is that the past two days may be a sell vacuum test of 4,000 and the midpoint of the month-long trading range.
  • At the moment, the odds favor a second leg down; traders will sell betting on at least sideways to down.
  • The bulls want a double bottom with the December low; however, with the daily chart being in a trading range, the odds favor the bulls getting disappointed and the market closing the November 1 breakout point high gap.
  • Ultimately, the bears will probably get a downside breakout and test the November low. However, the bears may run out of time this year.
  • Overall, the market is in a month-long trading range around 4,000 and tells traders that this is an area of agreement. Since 4,000 is such a significant price level, the market may go sideways for the rest of the year.

Emini 5-minute chart and what to expect today

  • Emini is down 68 points in the overnight Globex session.
  • The bears got a breakout below yesterday’s day session low and are currently well below the 4,000 big round number.
  • Today’s day session may close above the open of the day and disappoint the bears. This means traders should pay attention to the open of the day and if the market is not far below the open, and forming a bottom, consider looking to buy for a rally above the open.
  • As always, traders should expect a Trading range open and consider not trading for the first 6-12 bars.
  • Traders can also wait for a credible stop entry, such as a double top/bottom or a wedge top/bottom.
  • Overall, traders should expect a trading range day until there is clear trending behavior.

Yesterday’s Emini setups

Emini bull trend from the open then wedge top and failed breakout above trading range. Emini second leg down likely.

Al created the SP500 Emini charts.

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. 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: Profit Taking at Measured Move Target
  • The EURUSD came within a few pips of the measured move target (Purple line at 1.0700) based on the November 10 and 11 bull breakout bars
  • Bulls will take profits at this price level, and aggressive bears will sell for a scalp betting on enough profit taking for a profitable scalp.
  • Traders can argue that yesterday’s rally is the third push-up, forming a wedge top (purple dashed line). This means a reasonable profit target for the bears is the December 13 low (green dashed line) or the December 12 low.
  • The bulls know that the December 12 low is a logical target for the bears. The bulls might not be willing to buy again until the market has two legs down, testing the December 12 low at a minimum.  December 7 may be the bottom of the third leg, meaning the market would need to reach that low before bulls are willing to buy.
  • Overall, traders should expect the bulls to step aside soon and allow the market to get down a few legs, testing the channel’s bottom and the moving average (blue line).

Summary of today’s S&P Emini futures price action and what to expect tomorrow

Emini Bear trend from the open ended with wedge bottom and rounded bottom after 20 gap bar sell signal and breakout test, but minor reversal up

Al created the SP500 Emini charts.

End of day review

  • I will update at the end of the day.

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. Al talks about the detailed S&P Emini futures price action real-time throughout the day in the BrooksPriceAction.com on 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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