Emini and Forex Trading Update:
Monday December 16, 2019
I will update again at the end of the day.
Pre-Open market analysis
The Emini had a dramatic rally on Thursday morning on news of possibly no new China tariffs on December 15. It has been sideways since. Friday was a doji bar on the daily chart and therefore it is a low probability sell signal bar for today. The bears want Thursday’s breakout to fail. A reversal down would be from an expanding triangle top over the past month. However, any reversal down will probably be minor because the bull trend on the weekly chart is so strong.
The bulls see Friday as a pause after a climactic 2 week rally. They have had a great year. The year opened on its low and the bull trend has been very strong. They will try to get the year to close on its high. That will limit the downside for the rest of the month.
I have been saying for months that the Emini will work higher. That is still true, but Thursday was climactic. Therefore, there might be a pullback for a day or two this week.
Overnight Emini Globex trading
The Emini is up 14 points in the Globex session. It might gap up on the daily and weekly charts to a new high. Traders see the 3200 Big Round Number as a magnet above. The Emini will probably get there this week and maybe today. This is especially true with the strong bull trend on the weekly chart and the desire of the bulls to have the year close on its high.
A small gap up usually closes early in the day. However, with the strong momentum up on the daily and weekly charts, the odds would favor a pullback instead of a reversal. Unless the bears get several bear bars closing near their lows on the open, traders will look to buy any early selloff.
The Emini is in a buy climax and at resistance on the daily chart. That increases the chance of a trend day up or down. But most of the days over the past few weeks spent a lot of time going sideways, even though the Emini has been going up. Unless there is a strong breakout up or down early today, traders will again expect a lot of trading range price action.
EURUSD Forex market trading strategies
The daily chart of the EURUSD Forex market had a big bear reversal day on Friday. It is a sell signal bar for today for a failed breakout above the October high and the bear trend line.
However, it is in a 5 month trading range and the 3 week bull channel is tight. That lowers the probability of a reversal down. Furthermore, the bar on Friday was big. A big bar means big risk.
When there are things wrong with a sell setup, the reversal is usually only minor. Consequently, if there is a selloff this week, it will probably find support around the December 6 low.
Because the 3 week bull channel is tight, sideways to up is likely. In addition, the August 6 high is the top of the 5 month range and that is a magnet above. Therefore, traders should expect a test of that high within a few weeks even if there is a 1 – 2 week pullback first.
Overnight EURUSD Forex trading
The 5 minute chart of the EURUSD Forex market did not fall below Friday’s low. It therefore did not yet trigger the sell signal on the daily chart. That lack of urgency is evidence that the sell setup is not strong.
The overnight session opened near its low and rallied. But the range has only been 25 pips. It therefore did not erase much of Friday’s selling. The bulls want today to close near its high. It would then be a buy signal bar on the daily chart for tomorrow.
However, Friday’s selloff was strong enough so that traders expect at least a small 2nd leg sideways to down this week. That will limit today’s rally. The lack of triggering a sell signal makes a big bear day unlikely. Today will therefore probably remain a small, scalping day.
Summary of today’s S&P Emini futures price action and what to expect tomorrow
End of day summary
The Emini gapped above last week’s high and rallied to slightly above the 3200 Big Round Number. It stalled there for most of the day. There was a minor reversal down from a wedge top in the middle of the day. Today closed just below 3200.
The odds continue to favor higher prices, even if there is a 1 – 3 day pullback. Additionally, despite the 3 week rally, most days have had mostly trading range price action. Day traders will expect that to continue until there is a clear, strong breakout up or down.
See the weekly update for a discussion of the price action on the weekly chart and for what to expect going into next week.
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.