Trading Update: Tuesday December 12, 2023
S&P Emini pre-open market analysis
Emini daily chart
- The Emini rallied yesterday, creating follow-through buying after last Friday’s upside breakout. The Bulls are hopeful that they will get at least a small second leg up.
- The bulls are hopeful that yesterday’s follow-through is strong enough to increase the odds of a second leg up.
- The bears will see the past two trading days as an exhaustive buy climax. The bears will try to create a strong bear reversal bar.
- The market is still Always In Long and the odds favor higher prices. However, as I have been saying for some time, the market is far from the moving average. This increases the odds of the market testing down to the moving average soon.
- The market is dragging the moving average up to the current price level. This means that the market can reach the moving average by going sideways.
- It is possible that the Emini will reach the July high before testing the moving average.
- Traders will pay close attention to today, to see if the bears can form a strong bear reversal bar, following bulls the bar bull breakout. Because the market is in a tight bull channel, the bears the bears can hope for is sideways until they form more selling pressure.
Emini 5-minute chart and what to expect today
- Emini is down 4 points in the overnight Globex session.
- The bears formed a downside breakout during the 8:30 AM PT report.
- The bears are hopeful that this will be the start of a bear trend day, which would disappoint the bulls on the daily chart.
- Traders should anticipate the market having a lot of trading range price action on the open. Most traders should consider not trading during the first 6-12 bars unless they are comfortable using wide stops and trading with limit orders.
- It is common for breakouts to fail on the open and reverse. This makes it easy to take a big loss on the open, making it challenging to recover before the end of the day.
- There is an 80% chance of a trading range open and only a 20% chance of a trend from the open. This means that 80% of the time, there is no rush to enter the market on the open.
- Traders should try to catch the opening swing that often begins before the end of the second hour, after the formation of a double top/bottom or a wedge top/bottom.
Emini intraday market update
- The EURUSD bounced today after yesterday formed an inside bar.
- While the channel down is tight, it I becoming climactic, which will increase the odds of a pullback (which is happening now).
- It is important to realize that the selloff down to the December low is strong and therefore the odds favor a second leg down. This means that the market will probably form a lower high below the November high.
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.
Summary of today’s S&P Emini price action
Al created the SP500 Emini charts.
End of day video review
End Of Day Review will be presented in the Trading Room today. See below for details on how to sign up.
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.
