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Emini Inside Bar

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Market Overview: S&P 500 Emini Futures

The market formed a Weekly Emini inside bar closing near its high, forming a pullback from around the 20-week EMA. The bulls want a breakout above the inside bull bar with strong follow-through buying next week and a strong retest of the March 21 high. The bears want at least a small second leg sideways to down after a pullback.

S&P500 Emini futures

The Weekly S&P 500 Emini chart

Emini Weekly: PB and then 2nd Leg Down or Retest High?, Weekly Emini Inside Bar
  • This week’s Emini candlestick was an inside bull bar closing near high and above the 20-week EMA.
  • Last week, we said that traders will see if the 20-week EMA will act as temporary support even if the market temporarily trades below it.
  • The bulls have a strong rally in the form of a tight bull channel. 
  • They hope that the rally will lead to months of sideways to up trading after a pullback.
  • They hope that the 20-week EMA will act as support. So far this is the case.
  • The bulls want a breakout above the inside bull bar and strong follow-through buying next week.
  • They want a strong retest of the March 21 high followed by a strong breakout above, starting the larger bull channel phase.
  • At the very least, they hope to get at least a small retest of the prior trend extreme high (Mar 21), even if it only leads to a lower high (thereby forming a lower high major trend reversal).
  • The bears got a reversal from a higher high major trend reversal and a large wedge pattern (Feb 2, July 27, and Mar 21),
  • They also got a final flag reversal (ioi pattern in March).
  • They hope to get a TBTL (Ten Bars, Two Legs) pullback of at least 5-to-10%. They want at least a test of the 20-week EMA.
  • The selloff last week has retraced more than 5% and has tested the 20-week EMA.
  • The move down is strong enough to favor at least a small second leg sideways to down after a pullback.
  • This week, the bears needed to create follow-through selling below the 20-week EMA but were not able to do so. The bears are not yet as strong as they hoped to be.
  • If the market trades higher, they want a reversal from a lower high major trend reversal.
  • Since this week’s candlestick is an inside bar, the market is in breakout mode.
  • Because it is a bull bar closing near its high, the odds favor the first breakout to be above it. The first breakout can fail 50% of the time.
  • Traders will see if the 20-week EMA will continue to act as support if the market retests it in the weeks ahead.
  • Traders should be open for the possibility of a pullback (bounce) followed by a second leg sideways to down after that in the weeks ahead. The pullback is currently underway.
  • For now, traders will see if the bulls can create a strong follow-through bull bar next week.
  • The stronger the pullback (bounce), the more it will cast doubt on the strength of the bear’s resolve.
  • If the retest of the March 21 high is weak (with doji(s), bear bars, and overlapping candlesticks), the odds of another strong leg down from a lower high major trend reversal will increase.

The Daily S&P 500 Emini chart

Emini Daily: 2nd Leg Down after PB or Strong Retest of High?
  • The market traded sideways to up for the week. Thursday opened lower but reversed into an outside bull bar. Friday tested the 20-day EMA.
  • Last week, we said that the selloff is strong enough for traders to expect at least a small second leg sideways to down after a pullback.
  • The bears got a reversal from a higher high major trend reversal, a large wedge pattern (Feb 2, July 27, and Mar 21) and a parabolic wedge (Dec 28, Feb 12, and Mar 21).
  • They also got a reversal from a final flag (first half of March). 
  • The bears want the 20-day EMA to act as resistance and want at least a small second leg sideways to down after the pullback.
  • If the market trades higher, they want a reversal from a lower high major trend reversal or a double top with the March 21 high.
  • The bulls got a strong rally which lasted over 5 months.
  • They hope that the current rally will form a spike and (broader) channel which will last for many months after a deeper pullback.
  • They hope to get at least a small retest of the prior high (Mar 21) even if it forms a lower high.
  • The bulls will need to create consecutive bull bars closing near their highs, and trading above the 20-day EMA to increase the odds of a resumption of the trend.
  • This week, the bulls managed to create a two-legged pullback to the 20-day EMA.
  • The selloff was strong enough for traders to expect at least a small second leg sideways to down after a pullback.
  • Traders will also see if there will be at least a small retest of the prior high (Mar 21). If there is and especially if it is weak (with doji(s), bear bars, overlapping candlesticks, and maybe stalls around the 20-day EMA or around April 15 high area), the odds of another leg down from a lower high major trend reversal will increase.
  • If the bulls get strong consecutive bull bars closing near their highs and a strong retest of the March 21 high instead, traders will start to doubt the strength of the bears and may use the (second leg sideways to down) retest of the April 19 low as an opportunity to buy.

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