Trading Update: Wednesday December 14, 2022
Emini pre-open market analysis
Emini daily chart
- The Emini rallied above the December 1 high yesterday and sold off for most of the day. The market is having difficulty escaping the magnet pull of the 4,000 considerable round number. The Emini could test 4,000 after FOMC report today.
- Traders should expect a test of 4,000 in the next couple of days.
- I said yesterday that there would be sellers above the December 6 high and that they would scale in higher. Many traders would sell at the December 1 high due to the possibility of a wedge top with (Nov 15, Dec 1, and Dec 13).
- Because of the wedge top, traders will expect two legs sideways to down.
- Yesterday was a strong enough surprise breakout to increase the odds of at least a small second leg down.
- Today is a FOMC day which means the market may go sideways until the release of the report. Because the FOMC report can lead to a strong breakout, traders should be open to anything. However, they should expect disappointment and a trading range following the report’s release.
- The bears want today to lead to a strong follow-through bar closing far below 4,000. However more likely that the bears will be disappointed with the follow-through today.
- Overall, while the bears have a chance at a selloff and test of the November low, it will likely not happen before the end of the year. The market will likely continue sideways, around 4,000 going into the end of the year.
Emini 5-minute chart and what to expect today
- Emini is down 1 point in the overnight Globex session.
- The market has been going sideways for most of the overnight Globex session.
- Traders should expect a trading range open and consider not trading for the first 6-12 bars.
- Trader can also wait for a credible stop entry in the form of a Double Top/Bottom or a Wedge Top/Bottom.
- Today is a FOMC day which is released at 11:00 AM PT. This means traders should be mindful that the market will likely try and stay neutral for most of the day leading up to the report.
- Traders should consider getting flat an hour before the report.
- Once the report is released, traders should wait for the 2nd bar after the announcement to close before placing a trade. Getting a strong-looking report bar is common only to reverse on the next bar. Again, this also means traders should not trade the FOMC bar and wait to see the follow-through.
- Lastly, FOMC bars are typically big, meaning traders need to trade small. This means trading a 20% average position size. If unable to trade small, step aside and wait for tomorrow.
Yesterday’s Emini setups
Al created the SP500 Emini charts.
Here are several reasonable stop entry setups from yesterday. I show each buy entry with a green rectangle and each sell entry with a red rectangle. Buyers of both the Brooks Trading Course and Encyclopedia of Chart Patterns have access to a much more detailed explanation of the swing trades for each day (see Online Course/BTC Daily Setups).
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 came within 20 pips of the measured move target (purple line) based on the November 10 and 11 measured move target.
- The market will probably have to get closer to the measured move target above regardless of if there is a pullback first.
- If today is a bear bar closing on its low, bulls may exit below the bar due to the risk of a wedge top (Purple line) just under the measured move target.
- Overall, the channel up that began on November 21 is probably a bull leg in what will become a trading range. Traders will expect a selloff soon and test the November 21 low. This corresponds to the higher time frame charts as well.
- The rally that began in October is the first breakout of a tight bear channel, which means the bulls will likely need a pullback and the formation of a higher low major trend reversal.
Summary of today’s S&P Emini futures price action and what to expect tomorrow
Al created the SP500 Emini charts.
End of day review
- The bear managed to prevent a bull close after yesterday’s strong bear breakout bar.
- The open tried to form a small pullback bull trend, however the market went sideways going into the FOMC report.
- The bear got a strong breakout with follow-through on the FOMC announcement, which lead to a second leg down and a parabolic wedge bottom.
- Teh bulls got a reversal up from a final flag and the market went sideays for the rest of the day.
- Today’s FOMC announcement sold off to the 4,000 big round number, which it reversed into a trading range. Traders should expect the market to try and close around 4,000 going into the end of the year.
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
Traders can see the end of the day bar-by-bar price action report by signing up for free at BrooksPriceAction.com. Al talks about the detailed S&P Emini futures price action real-time throughout the day in the BrooksPriceAction.com on 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.
