Emini Buyers below the First Pullback

Market Overview: S&P 500 Emini Futures

There were Emini buyers below the first pullback on the monthly chart. The bulls hope to get another strong leg up completing the wedge pattern with the first two legs being July 27 and March 21. The bears want a reversal from a higher high major trend reversal and a large wedge pattern (Dec 2, July 27, and March 21).

S&P500 Emini futures

The Monthly S&P 500 Emini chart

• The May monthly Emini candlestick was a bull bar with a small tail above closing in its upper half.
• Last month, we said that there may be buyers below the first pullback from such a strong bull microchannel (perhaps holding the market up in the first half of May).
• The market made a new all-time but closed below the March 21 high.
• The bulls got a strong rally starting in October in the form of a 6-bar bull microchannel.
• Sometimes, there may be buyers below the first pullback following such a strong bull microchannel. It was the case in May.
• They hope that the market has entered a broad bull channel phase.
• They hope to get another strong leg up completing the wedge pattern with the first two legs being July 27 and March 21.
• If there is a pullback, the bulls want it to be sideways and shallow (filled with weak bear bars, bull bars, doji(s) and overlapping candlesticks). 
• They want the pullback to form a higher low and the 20-month EMA or the bull trend line to act as support.
• The Bears want a failed breakout above the all-time high.
• They want a reversal from a higher high major trend reversal and a large wedge pattern (Dec 2, July 27, and March 21).
• They see the last 3 sideways candlesticks as forming a possible final flag of an extended rally.
• They hope to get another leg down forming the second leg sideways to down with the first leg being April.
• Since May was a bull bar closing in its upper half, it is a buy signal bar for June. It is not a strong sell signal bar.
• The rally has lasted a long time and is slightly climactic. April was the first sign of a possible pullback phase.
• However, the lack of follow-through selling (in May) indicates that the bears are not yet strong.
• Odds slightly favor the market to trade at least a little higher.
• Traders will see if the bulls can create another breakout into new all-time high territory in June.
• Or will the market trade slightly higher but stall around the current all-time high area?

The Weekly S&P 500 Emini chart

• This week’s Emini candlestick was a bear bar with a long tail below closing in its upper half.
• Last week, we said that the market could still be in the sideways to up phase. Traders will see if the bulls can create another bull bar or will the market continue to stall (around the all-time high area) followed by a retest of the April 19 low in the weeks ahead.
• The market traded sideways earlier in the week but broke lower from mid-week onwards. Friday traded lower but reversed a big part of the week’s move in the final 4 hours of the week.
• The bulls had a 6-bar bull microchannel which means persistent buying. There may be buyers below the first pullback from such a strong bull micro channel. It was the case this week.
• They hope that the rally will lead to months of sideways to up trading after the recent pullback (broad bull channel). They hope that the broad bull channel phase has begun.
• They want to get another strong leg up completing the wedge pattern with the first two legs being July 27 and March 21.
• They see this week simply as a pullback and want the market to continue higher after the pullback.
• If the market trades lower, they want the pullback to form a higher low or a double bottom bull flag with April 19 low and the 20-week EMA to act as support. 
• Previously, the bears got a reversal from a higher high major trend reversal (against 2021 high), a large wedge pattern (Feb 2, July 27, and Mar 21) and a final flag reversal (ioi pattern in March).
• The selloff retraced more than 5% and has tested the 20-week EMA. However, the bears were not able to create the second leg sideways to down.
• They now want a reversal from a higher high major trend reversal or a double top with the March 21 high.
• They want a TBTL (Ten Bars, Two Legs) pullback trading far below the 20-week EMA.
• At the very least, they want a retest of the April 19 low, even if it forms a higher low.
• The bears need to create a few strong bear bars to increase the odds of retesting the April 19 low.
• Since this week’s candlestick is a bear bar with a long tail below and closing in the upper half of its range, it is not a strong sell signal bar for next week. 
• Traders will see if the bulls can create another strong breakout into all-time high territory.
• Or will the market continue to stall around the current all-time high area?
• If the bears get a surprise strong bear follow-through bar instead, that will swing the odds in favor of a retest of the April 19 low.
• Moving forward, if the market has entered a broad bull channel or a trading range phase, traders should expect more two-sided trading.

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