Market Overview: S&P 500 Emini Futures
The weekly chart formed an Emini breakout above the ioi pattern. The bulls need to create follow-through buying to confirm the breakout above. The bears hope that the sideways tight trading range (the ioi pattern) will be the final flag of the rally.
S&P500 Emini futures
The Weekly S&P 500 Emini chart
- This week’s Emini candlestick was a bull bar closing in its upper half with a prominent tail above.
- Last week, we said that the market has formed an ioi (inside-outside-inside) breakout mode pattern, and the bulls want a breakout above, while the bears want a breakout below the inside bar.
- This week opened higher and then broke out above the ioi (inside-outside-inside) pattern.
- The bulls have a tight bull channel. They hope the rally will lead to many months of sideways to up trading after a pullback.
- Since this week was a breakout above the ioi (inside-outside-inside) pattern, the bulls need to create a follow-through bull bar to confirm the breakout.
- If a pullback begins, the bulls want it to be sideways and shallow, filled with bull bars, doji(s) and overlapping candlesticks.
- The bears want a reversal from a higher high major trend reversal and a large wedge pattern (Feb 2, July 27, and Mar 21).
- They want a failed breakout from the ioi (inside-outside-inside) pattern.
- They also see a parabolic wedge in the third leg up since October (Dec 28, Feb 12, and Mar 21) and an embedded wedge (Feb 12, Mar 8, and Mar 21).
- The bears hope that the sideways tight trading range (the ioi pattern) will be the final flag of the rally.
- 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 problem with the bear’s case is that they have not been able to create any meaningful selling pressure. They will need to create a few strong consecutive bear bars to indicate that they are at least temporarily back in control.
- However, once traders see a few strong bear bars, the pullback could be halfway over.
- Since this week’s candlestick is a bull bar closing in its upper half, it is a buy signal bar for next week.
- The market continues to be Always In Long. However, the rally has lasted a long time and is slightly climactic.
- Traders are looking for signs of profit taking but there are none still. Until the bears can create strong bear bars, traders will not be willing to sell aggressively.
- Sometimes, a euphoric market (as it is now) can continue higher into a blow-off top (parabolic climax). It could be underway.
- Traders will see if the bulls can create a follow-through bull bar following this week’s breakout above the ioi (inside-outside-inside) pattern.
- So far, selling pressure continues to be weak with no follow-through selling.
The Daily S&P 500 Emini chart
- The market continued sideways earlier in the week and broke above the tight trading range on Wednesday. Thursday opened higher but closed as a small bear doji. Friday was another bear doji.
- Last week, we said that the market is still Always In Long. However, the rally has lasted a long time and is slightly climactic. Traders should be prepared for a minor pullback which can begin at any moment.
- So far, the bears have not yet been able to create any meaningful selling pressure and follow-through selling breaking below the 20-day EMA.
- The bulls got a tight bull channel making a new all-time high.
- They hope that the current rally will form a spike and channel which will last for many months after a deeper pullback.
- They got 3 pushes up since the January low, therefore a wedge (Feb 12, Mar 8, and March 21).
- The third leg up (since Feb 21 low) consists of 3 pushes (Mar 4, Mar 8, and Mar 21) therefore an embedded wedge.
- The risk of a profit-taking event is elevated. However, bears have not yet been able to create any meaningful selling pressure and follow-through selling.
- If there is a deeper pullback, the bulls want at least a small sideways to up leg to retest the current trend extreme high (now March 21).
- The bears want 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 see an embedded wedge in the current leg up (Mar 4, Mar 8, and Mar 21).
- They hope the recent sideways tight trading range will be the final flag of the rally.
- The bears will need to create consecutive bear bars closing near their lows and trading far below the 20-day EMA and the bear trend line to indicate that they are at least temporarily back in control.
- The problem with the bear’s case is that they have not yet been able to create any meaningful selling pressure at all. Until they can do so, traders will not be willing to sell aggressively.
- So far, while the bulls managed to create a breakout above the tight trading range, the follow-through buying has been disappointing.
- However, the selling pressure remains weak still (no strong consecutive bear bars breaking below the 20-day EMA).
- For now, the market is still Always In Long. Traders will see if the bulls can continue to create sustained follow-through buying.
- While the rally has lasted a long time and is slightly climactic, there are no signs of strong selling pressure yet.
- The bears need to create sustained follow-through selling trading below the 20-day EMA to show that they are at least temporarily back in control. They have not yet been able to do so.
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