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Weekly Emini Double Bottom Bull Flag

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Market Overview: S&P 500 Emini Futures

The market formed a weekly Emini double bottom bull flag (Apr 19 and Aug 5). The bulls want a reversal from a double bottom bull flag (Apr 19 and Aug 5) and hope to get a small retest of the all-time high, even if it only forms a lower high. The bears hope to get at least a small second leg sideways to down to retest the August 5 low.

S&P500 Emini futures

The Weekly S&P 500 Emini chart

Emini Weekly: Double Bottom Bull Flag, Broad Bull Channel?, Weekly Emini Double Bottom Bull Flag
  • This week’s Emini candlestick was a big bull bar closing near its high below the 20-week EMA.
  • Last week, we said that the 3-week selloff has lasted a long time and is slightly climactic. Traders will see if the bears can create a follow-through bear bar trading below the 20-week EMA or would the market form a minor pullback in the next 1-2 weeks instead.
  • The market gapped down to the 50-week EMA on Monday and traded sideways to up for the rest of the week.
  • The bears got a reversal from a higher high major trend reversal, a wedge pattern (Jul 27, Mar 21, and Jul 16) and a trend channel line overshoot.
  • They also see an embedded wedge (May 23, Jun 28, and Jul 16) and a final flag pattern (sideways consolidation from the mid to the end of Jun).
  • 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. They got what they wanted.
  • If the market forms a pullback (bounce), they want the 20-day EMA or the bear trend line to act as resistance.
  • The bears hope to get at least a small second leg sideways to down to retest the August 5 low.
  • The bulls hope that the market is in the broad bull channel phase. 
  • They want the pullback to form a higher low followed by a resumption of the broad bull channel.
  • They want a reversal from a double bottom bull flag (Apr 19 and Aug 5).
  • They hope to get a small retest of the all-time high, even if it only forms a lower high.
  • Since this week’s candlestick is a bull bar closing near its high, it is a buy signal bar for next week. 
  • Traders will see if the bulls can create a strong entry bar closing above the 20-week EMA.
  • Or will the market trade slightly higher but stall around the 20-week EMA?
  • The selloff had moved almost 10%. It may have reached the bear’s targets which means that we may see some profit-taking activity.
  • If the market trades higher, traders will see the strength of the pullback (bounce).
  • If it is weak and sideways, the odds of at least a small sideways to down leg to retest the Aug 5 low will increase (even if it only forms a higher low).
  • However, if the bulls manage to create consecutive bull bars closing near their highs, the odds of a retest of the all-time high will increase.

The Daily S&P 500 Emini chart

Emini Daily: Parabolic Wedge, Climactic Reversal
  • The market gapped down to the 200-day EMA on Monday. The Emini then traded sideways to up for the rest of the week.
  • Previously, we said that the odds continue to slightly favor the market to still be in the sideways to down pullback phase. Traders expect the current move to have at least two or three legs (wedge).
  • The gap down on Monday formed the third leg down since the selloff started.
  • The bears got a reversal from a higher high major trend reversal and a large wedge pattern (Jul 27, Mar 21 and Jul 16).
  • They got a reversal from an embedded wedge (May 23, Jun 28, and Jul 16) and a final flag pattern (starting from the second half of Jun).
  • They want another leg down completing the wedge (with the first two legs being July 19 and July 25) and a retest of the April 19 low, even if it only forms a higher low. They got what they wanted.
  • If there is a deep pullback (bounce), they want a reversal from a double top bear flag with the August 1 high or from a lower high major trend reversal.
  • They want the 20-day EMA or the bear trend line to act as resistance.
  • The Bulls hope the rally is in a (broad) channel phase.
  • They want the pullback to form a higher low followed by a resumption of the broad bull channel.
  • They want a reversal from a parabolic wedge (Jul 19, Jul 25, and Aug 5), a trend channel line overshoot and a double bottom bull flag (Apr 19 and Aug 5).
  • If the market trades lower, they want a reversal from a higher low major trend reversal and the 200-day EMA to continue acting as support.
  • The bulls must continue creating follow-through buying trading far above the 20-day EMA and the bear trend line to increase the odds of retesting the all-time high.
  • So far, the selloff has moved almost 10%. It may have reached the bear’s target.
  • We may see some profit-taking activity which could have begun this week.
  • If there is a deeper pullback (bounce), traders will see the strength of the pullback.
  • If it is weak and sideways, the odds of another leg down from a double top bear flag with August 1 will increase.
  • But if the bulls can create strong consecutive bull bars closing near their highs, it can increase the odds of a retest of the all-time high.
  • For now, traders will see if the bulls can continue to create follow-through buying.
  • Or will the market stall to be followed by a retest of the recent low (Aug 5), forming a double bottom or a major trend reversal pattern?

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