Emini and Forex Trading Update:
Thursday December 3, 2020
I will update again at the end of the day.
Pre-Open market analysis
Yesterday pulled back and closed the gap on the monthly chart, but not the gap on the daily chart. Yesterday closed on its high, and it is a High 1 buy signal bar for today, just below Tuesday’s all-time high. Today will probably trade above yesterday’s high to trigger the buy signal.
However, with most days for over a month having intraday reversals, traders will look for at least one reversal today. Therefore, the odds are against a big bull day today, despite a High 1 buy signal on the daily chart.
Can today be a bear day? Yesterday was a bull channel on the 5-minute chart and a bull channel is a bear flag. But even if the bears get a break below the channel, traders will expect a lot of trading range trading, like most days for over a month.
If there is an early series of strong trend bars up or down, traders will look for a trend. However, they know the odds are that it will not last all day.
Overnight Emini Globex trading
The Emini is down a couple points in the Globex session. If the day session opens around here, traders will expect that today will go above yesterday’s high. That would trigger the High 1 bull flag buy signal on the daily chart.
But because yesterday was in a bull channel, there should be a swing down at some point today. Bull channels can sometimes last 2 to 3-days, but most do not. A bull channel usually evolves into a trading range, and that requires a break below the bull trend line. Therefore, there will probably be at least a couple hours of sideways to down trading today.
However, remember that most days for over a month have had swings up and down. Therefore, traders will expect that again today, even if there is a trend up or down on the open.
EURUSD Forex market trading strategies
The EURUSD Forex market on the daily chart is breaking out strongly above its 4-month trading range. Yesterday was the 2nd consecutive bull day with a big body and closing near its high and above the trading range. That was enough for traders to conclude that the breakout will continue higher and have at least 2 legs up.
A pullback can begin at any time. The bulls will start to take some profits soon. If the profit-taking lasts more than a day, there will be a pullback.
But traders will buy the pullback. The bulls who missed the move are eager to get long. The bears who are short are desperate to get out with a smaller loss.
With both the bulls and bears wanting to buy, the 1st pullback should be brief. Traders will not expect more than a 3-day pullback until after there has been a 2nd leg up to resistance.
The nearest resistance comes from 2 measured move targets. The nearer one is at 1.2206, which is based on the breakout above the small wedge from November 23 to November 30. The higher one is 1.2236, which is based on the breakout above the double top of October 21 and November 9. There are other higher targets as well. The most important is the February 2018 high of 1.2555.
Overnight EURUSD Forex trading
The 5-minute chart of the EURUSD Forex market went sideways and then up overnight. Even though today is currently a big bull bar on the daily chart, there is an expanding triangle on the 5-minute chart. That means that the bulls are starting to take some profits. It increases the chance of more sustained profit taking coming within a few days.
Therefore, the bears should soon get a swing down on the 5-minute chart. But, as I said, even if the selloff is strong on the 5-minute chart, traders will buy the 1st 1 to 3-day pullback on the daily chart.
Because of the overnight trading range, day traders will be willing to sell for scalps today. The rally over the past 3 hours has been strong. Most daytraders will not sell until the chart starts to go sideways again. And even then, they will only scalp unless there is a strong reversal down.
With the daily and weekly charts being strongly bullish, most day traders will focus on buying pullbacks than on selling rallies.
Summary of today’s S&P Emini futures price action and what to expect tomorrow
End of day summary
After a rally from a High 2 bull flag on the open made a new all-time high, the Emini went sideways until 11 a.m. PST. It made another new high and then a new low. It closed near the open. Remember, most of the days over the past 5 weeks either closed near the open or the middle of the day’s range.
While that is often neutral, there is now a micro wedge top over the past 10 days, and today is a sell signal bar. Since the 10-day bull channel is tight and today did not close on the low, this is not a strong sell setup. But with the bad bull flags on the weekly and monthly charts, traders are looking for a reversal down at some point in December or early January.
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.