Weak Emini Follow-through Bull Bar

Market Overview: S&P 500 Emini Futures

The market traded higher but closed with a long tail above forming a weak Emini follow-through bull bar. The bulls want the Emini to reverse back above the 20-week exponential moving average. The bears want another leg down to complete the wedge pattern with the first 2 legs being August 18 and October 3.

S&P500 Emini futures

The Weekly S&P 500 Emini chart

• This week’s Emini candlestick was a bull bar closing in the lower half with a long tail above.
• Last week, we said that the odds slightly favor the market to trade at least a little higher. Traders will see if the bulls can get a strong follow-through bull bar or will next week trade slightly higher, but close with a long tail above or a bear bar.
• This week tested the 20-week EMA but closed with a long tail above. 
• The bulls got some follow-through buying albeit weaker.
• They want the Emini to reverse back above the 20-week exponential moving average.
• They hope to get a retest of the July 27 high from a double-bottom bull flag (Aug 18 and Oct 3).
• They see the move down simply as a 50% pullback (of the move which started in March) within a broad bull channel.
• If the market trades lower, they want a reversal from a double bottom with October 3 or a wedge bull flag.
• The bears got a two-legged pullback testing the breakout point (Feb 2) and the bull trend line.
• They want a strong breakout below the bull trend line with follow-through selling.
• If there is a pullback (bounce), they want another leg down from a double top bear flag (Sept 1 and Oct 12) to complete the wedge pattern with the first 2 legs being August 18 and October 3.
• Since this week is a bull bar closing in the lower half with a long tail above, it is a buy signal bar albeit weaker.
• Odds slightly favor the market to still be in the sideways to up pullback phase.
• Traders will see if the bulls can continue creating follow-through buying or will next week trade lower and retest Oct 3 low instead?
• While the market may still trade sideways to down for a couple more weeks, the market is likely still Always In Long (bull trend remains intact; higher highs, higher lows).
• The pullback to October 3 has also fulfilled the minimum requirement of TBTL (Ten Bars, Two Legs).

The Daily S&P 500 Emini chart

• The market traded higher in the first half of the week and formed a small pullback on Thursday and Friday.
• Last week, we said that the odds slightly favor the Emini to trade at least a little higher.
• The bears got a second leg sideways to down from a lower high major trend reversal and a double top bear flag (Sept 1 and Sept 14). 
• They got a 50% pullback of the rally which started in March, testing the February 2 high which was the breakout point of the rally.
• They want another leg down from a double top bear flag (Sept 1 and Oct 10), completing the wedge pattern with the first two legs being August 18 and October 3.
• If the market trades higher, they want a smaller double top bear flag with October 12 and reverse down from around the bear trend line.
• The bulls want a reversal up from a double bottom bull flag (Aug 18 and Oct 3), a micro double bottom (Oct 3 and Oct 6) and a higher low major trend reversal (Oct 13).
• They hope to get a retest of the July 27 high and a strong breakout above.
• They see the large two-legged move down (Aug 18 and Oct 3) simply as a 50% pullback and a test of the breakout point (Feb 2) of the rally.
• They see Thursday and Friday simply as a small pullback and want at least another leg sideways to up next week, trading far above the 20-day EMA.
• The next targets for the bulls are the bear trend line and the September high.
• The last two bear bars had prominent tails below and a lot of overlapping ranges.
• Odds slightly favor at least a small second leg sideways to up next week.
• Traders will see if the bulls can create more bull bars closing near their highs or will next week trade slightly higher but stall around the October 12 high area.
• For now, while the market may still trade sideways to down for a few more weeks, the bull trend remains intact.

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