Emini Bad Follow-Through after Buy Climax

Trading Update: Friday December 15, 2023

S&P Emini pre-open market analysis

Emini daily chart

• The Emini formed a strong bull breakout on Wednesday. However, they failed to get strong follow-through buying.
• The bulls are becoming climactic, which increases the odds of profit-taking and sideways trading for several bars.
• The market has been away from the moving average for more than 29 bars, and because of Wednesday’s bull breakout, the market is far from the moving average. The moving average is a measurement of the average price.
• Eventually the bulls will be unwilling to buy far from the average price, and will only be willing to buy at the average price. This means the odds favor the market testing the moving average over the next week or two.
• December is the year’s final month, and the bulls are trying their best to get the year to close on its high as a sign of strength.
• The bears will try to create as big of a tail as possible for the year. However, the best the bears can expect is a small selloff compared to this year’s rally.
• Traders should expect the buy-the-close bulls who bought Wednesday’s close to be disappointed after yesterday’s follow-through. These bulls will probably look to exit soon or take partial profits, expecting a pullback.

Emini 5-minute chart and what to expect today

• Emini is down 6 points in the overnight Globex session.
• The Globex market sold off during the 8:30 AM PT report.
• The bulls are trying to undo the damage caused by the bear breakout, and the bears are hopeful that any rally following the report will lead to a second leg down.
• Traders should expect a lot of trading range price action on the open today. This means traders should consider waiting for 6 – 12 bars before placing a trade unless they are comfortable with wide stops and limit orders.
• Most traders should wait for the opening swing to develop, which often begins before the end of the second hour. It is common for the opening swing to begin after the formation of a double top/bottom or a wedge top/bottom.
• Today is Friday, so weekly support and resistance are important. Traders should be prepared for a potential surprise breakout late in the day as traders decide on the close of the weekly chart.
• Overall, traders should be cautious on the open. It is common for the open to have several reversal attempts before deciding on the opening swing’s direction. By being patient on the open, a trader has a better chance of catching either the high or low of the day, thus improving their trader’s equation.

Yesterday’s Emini setups

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

• The EURUSD formed a strong upside breakout, testing the high of November 28^th.
• While the rally was strong over the past two trading days, it was testing important resistance (November 28^th), where the bulls were trapped.
• The selloff on November 28^th led to a sharp reversal down, trapping bulls who held long. The selloff reached a 50% pullback of the November rally, and bulls began scaling into longs.
• The bulls who bought the November high were so disappointed by the pullback that many sold out of longs today.
• The bears want today to form a double top with the November high, and a test down to the November 6^th neckline.
• Next, the bears want a Measured move down of the November range which would project to near the October low.
• The bulls want today to become a pullback from this week’s rally, leading to a second leg up.

Summary of today’s S&P Emini price action

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.

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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.

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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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