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Emini 2nd Leg Down after December 18th Breakout

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Trading Update: Monday December 30, 2024

Emini end of day video review

Emini EOD Review Joseph Imbornone

Follow Joseph’s YouTube channel for more Al Brooks price action analysis.

S&P Emini market analysis

Emini daily chart

  • The Emini sold off last Friday as bulls began to give up on the ideal of a successful reversal of the December 18th downside breakout. The December 18th breakout is enough of a surprise that the odds favor a 2nd leg down.
  • Because the December 18th breakout bar is within an overall trading range and not a bear trend, the pullback was likely to be deeper than what traders wanted to see before the bears got a 2nd leg.
  • Big breakout bars inside trading ranges often get delayed second legs. This is why, when the market is in a trading range, it is often better to wait and see what the pullback looks like before placing a trade.
  • The daily chart has been in a bull channel for several months, and the odds favor the channel’s evolution into a trading range.
  • Overall, the odds favor a test below the December 20th low as traders expect the current selloff to fall below the first leg down that began on December 18th.

Emini 5-minute chart and what to expect today

  • The Globex market formed a strong downside breakout during the early morning hours, increasing the odds of the U.S. open getting a gap down.
  • Because the Gap down is large, the odds favor a 2nd leg down and limited upside on the open.
  • The bears have a trend from the open bear trend during the first 7 bars of the day.
  • The bulls hope the market will form a parabolic wedge bottom, leading to a reversal. Even if the bulls get a successful reversal up, the odds favor a trading range and not a bull trend.
  • The market is far from the moving average on the day-only (RTH) chart. This increases the odds of a test up to the moving average sometime during the first 2 hours of the day.
  • The market does not have to race up to the moving average. Every added bar will drag the average price closer to the current price.

Friday’s Emini setups

SP500 Emini 5-Min Chart Sell Climax and Then Trading Range

Al created the SP500 Emini charts.

Here are reasonable stop entry setups from Friday. 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.

Summary of today’s S&P Emini price action

SP500 Emini 5-Min Chart Wedge Bottom and Then Small PB Bull Trend

Al created the SP500 Emini charts.

EURUSD Forex market analysis

EURUSD Forex daily chart

  • The EURUSD is forming a tight trading range on the daily chart following the December 18th downside breakout.
  • The bears are keeping the market below the moving average, which is a sign that they are in control.
  • The bulls are doing well, making the market go sideways. Next, the bulls need to close above the moving average.  They can do it with one large bar or, ideally, a series of 3-4 consecutive bull bars closing near their highs.

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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