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Emini Sideways to Up

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Market Overview: S&P 500 Emini Futures

The market formed an Emini sideways to up breaking into new high territory. The bulls want to get another strong leg up completing the wedge pattern with the first two legs being July 27 and March 21. The third leg up is currently underway. If the market trades higher, the bears want a micro wedge to form with the first two legs being June 7 and June 12.

S&P500 Emini futures

The Weekly S&P 500 Emini chart

Emini Weekly HH MTR but No Sell Signal Bar yet
  • This week’s Emini candlestick was a bull bar closing near its high in new all-time high territory.
  • Last week, we said that traders will see if the bulls can create a follow-through bull bar and a breakout into all-time high territory or will the market continue to stall around the prior all-time high area.
  • The market made a new high and the bulls got a follow-through bull bar following last week’s breakout above the May 23 high.
  • They hope that the rally will lead to months of sideways to up trading (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. The third leg up is currently underway.
  • If the market trades lower, they want the pullback to form a higher low or a double bottom bull flag with the May 31 or the April 19 low. They want the 20-week EMA to act as support. 
  • Previously, the bears got a reversal from a higher high major trend reversal (against 2021 high) and a large wedge pattern (Feb 2, July 27, and Mar 21).
  • The selloff retraced more than 5% and 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 and a trend channel line overshoot.
  • They see the sideways trading range in the last 3 weeks of May as a possible final flag of the rally.
  • 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.
  • If the market trades higher, they want a micro wedge to form with the first two legs being June 7 and June 12.
  • The problem with the bear’s case is that they have not been able to create strong bear bars with sustained follow-through selling.
  • They need to create a few strong consecutive bear bars to increase the odds of a minor pullback.
  • At the very least, they need a strong reversal bar or a strong sell signal bar before traders would consider selling more aggressively.
  • Since this week’s candlestick is a bull bar closing near its high, it is a buy signal bar for next week. 
  • The odds slightly favor the market to still be in the sideways to up phase.
  • However, the move is becoming slightly climactic and overbought.
  • Traders will see if the bulls can continue to create follow-through buying or will the market trade slightly higher but start to stall around the current levels.
  • If the market starts to stall, we may see a deeper pullback develop within a few weeks.
  • Moving forward, if the market has entered a broad bull channel or a trading range phase, traders should expect more two-sided trading.

The Daily S&P 500 Emini chart

Emini Daily: HH MTR, Small Final Flag & Island Top?
  • The market traded sideways earlier in the week and then gapped up on Wednesday. The market then traded sideways with Friday closing as an inside bull bar near its high.
  • Last week, we said that traders would see if the bulls can create more follow-through buying or will the market continue to stall around the all-time high area.
  • The bears want a reversal from a higher high major trend reversal and an island top.
  • They want a reversal from a wedge in the current leg up (Jun 3, Jun 7, and Jun 12).
  • If the market trades higher, they want a reversal from a final flag pattern (the last 3 candlesticks).
  • They want a two-legged pullback lasting at least a few weeks.
  • At the very least, they want a retest of the April 19 low, even if it only forms a higher low.
  • They need to create consecutive bear bars closing near their lows and trading below the 20-day EMA to increase the odds of a deeper pullback.
  • The bulls hope that the current rally will form a spike and (broader) channel which will last for many months. 
  • They want another strong leg up (with the first leg being the April 19 to May 23 move). The second leg up is currently underway.
  • If the market forms a pullback, they want another leg up, completing the wedge pattern (with the first two legs being May 23 and Jun 12)
  • If a deeper pullback forms, they want a reversal from a double bottom bull flag (with either May 31 or April 19 lows) and a higher low.
  • They want the 20-day EMA or the bull trend line to act as support.
  • So far, the market continues to trade sideways to up with not much selling pressure.
  • The odds slightly favor the market to still be in the sideways to up phase.
  • The bears have not yet been able to create strong bear bars with follow-through selling.
  • However, the move is becoming slightly climactic and overbought.
  • If the bears start getting strong bear bars with follow-through selling, we may see stronger profit-taking activity begin.
  • For now, traders will see if the bulls can create more follow-through buying or will the market trade slightly higher but start to stall.
  • If the market starts to stall, we may start to see more profit-taking activity in the weeks ahead.

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