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Emini 6-Bar Bull Micro Channel

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Market Overview: S&P 500 Emini Futures

The S&P 500 Emini futures formed a 6-bar bull micro channel on the weekly chart. That means strong bulls. The bulls want a strong breakout above February 2 high completing the wedge pattern with the first two legs being December 13 and February 2. The bears hope that the current leg up is simply a buy vacuum retest of the February 2 high. They want a reversal down from a lower high major trend reversal or a double top with February 2 high and a larger wedge pattern (Dec 13, Feb 2, and April 18).

S&P500 Emini futures

The Weekly S&P 500 Emini chart

Emini Weekly: LH MTR, Micro Wedge, 6-Bar Bull Micro Channel
  • This week’s Emini candlestick traded above last week’s high but closed as a small bear doji.
  • Last week, we said that traders will see if the bulls can create a strong retest and breakout above February 2 high or will the bears form a decent sell signal bar within the next few weeks.
  • The bears hope that the current leg up is simply a buy vacuum retest of the February 2 high. 
  • They want a reversal down from a lower high major trend reversal or a double top with February 2 high and a larger wedge pattern (Dec 13, Feb 2, and April 18).
  • Because of the strong move up, the bears will need a strong sell signal bar or a micro double top before they would be willing to sell more aggressively.
  • The highs of the last 2 candlesticks formed a micro double top (Apr 14 and Apr 18). The bears also have a micro wedge (Apr 4, Apr 14, and Apr 18).
  • The bears will need to create follow-through selling next week to increase the odds of the start of the bear leg.
  • The bulls got a reversal up from a double bottom bull flag with the December low (Dec 22 and Mar 13).
  • They want another strong leg up completing the wedge pattern with the first two legs being December 13 and February 2. The third leg up is currently underway.
  • At the very least they want a retest of February high.
  • The bulls currently have a 6-bar bull micro channel and the move up is in a tight bull channel. That means strong bulls. 
  • Often, there are buyers below the first pullback from such a strong bull micro channel.
  • If there is a pullback, the bulls want at least a small second leg sideways to up to retest the current leg high (April 18).
  • This week was a bear doji and closed below the middle of the bar. It is a weak sell signal bar.
  • Traders will see if the bears can create follow-through selling next week or will the market trade slightly lower but find buyers instead.
  • The Emini is trading near the top of the 26-week trading range. Buying at the top of a trading range is not an ideal setup.
  • Traders will BLSH (Buy Low, Sell High) until there is a strong breakout above the February high with follow-through buying.
  • As strong as the current move up is, it could simply be a buy vacuum retest of the trading range high to be followed by a bear leg thereafter.

The Daily S&P 500 Emini chart

Emini Daily: Larger Wedge, 3rd Leg Wedge, Tight Bull Channel
  • The Emini gap above last week’s high on Tuesday but closed as a bear bar. The market then traded sideways to down for the rest of the week.
  • Last week, we said that the large wedge and smaller wedge in the current leg up increase the odds that we may see a pullback which may begin at any moment.
  • The pullback so far is weak, and the bears have not yet been able to create strong consecutive bear bars.
  • The current leg up from March 13 low is in a tight bull channel, which means persistent bulls.
  • The small second leg sideway to up from April 6 has a lot of overlapping candlesticks which means a loss of momentum.
  • The bulls want a retest of the February 2 high followed by a breakout and another big leg up, completing the wedge pattern with the first two legs being December 13 and February 2. 
  • If there is a deeper pullback, the bulls want a larger second leg sideways to up to retest the current leg high.
  • The bears see the move up from October 2022 simply as forming a larger double top bear flag (Aug 16 and Feb 2) within a broad bear channel.
  • They determined that the August high is the last major lower high, therefore, believe that the Emini is still in a bear trend.
  • They want a retest of the October low from a lower high major trend reversal or a double top (Feb 2). 
  • They also see a larger wedge top forming (Dec 1, Feb 2 and April 18) with a smaller wedge in the current leg up (Mar 22, Apr 4, and Apr 18).
  • The problem with the bear’s case is that the buying pressure since March 13 low is stronger with bull bars closing near their highs and bear bars having little follow-through. 
  • They need to create consecutive bear bars closing near their lows to increase the odds of lower prices.
  • While the move up from March 13 low is strong, it could simply be a buy vacuum retest of the February 2 high.
  • The large wedge and smaller wedge in the current leg up increase the odds that we may see a pullback which may begin at any moment. It may have begun this week.
  • So far, the pullback is weak. Traders will see if the bears can create strong consecutive bear bars closing near their lows.
  • If they do, it increases the odds of the bear leg beginning within the 26-week trading range around 3750 and 4200.
  • If the pullback remains weak with overlapping bars and trading mostly sideways, the odds of another leg up will increase after the end of the pullback.
  • Traders will BLSH (Buy Low, Sell High) until there is a breakout from either direction with follow-through buying/selling.

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