Market Overview: S&P 500 Emini Futures
There was no weekly Emini follow-through buying following last week’s breakout above the March 21 high. The bulls see this week simply as a pullback and want the market to continue higher. The bears want a reversal from a higher high major trend reversal or a double top with the March 21 high.
S&P500 Emini futures
The Weekly S&P 500 Emini chart
- This week’s Emini candlestick was a bear doji with tails above and below.
- Last week, we said that the market could still be in the sideways to up pullback phase and traders should be open to the possibility of a second leg sideways to down after the current pullback.
- The market made a new high but the bulls did not get a follow-through bull bar following last week’s breakout above the March 21 high.
- The bulls hope that the rally will lead to months of sideways to up trading after the recent pullback (broad bull channel). They hope that the broad bull channel phase has begun.
- They see this week simply as a pullback and want the market to continue higher.
- They have a 6-bar bull microchannel which means persistent buying. There may be buyers below the first pullback from such a strong bull micro channel.
- They hope to get another strong leg up completing the wedge pattern with the first two legs being July 27 and March 21.
- If the market trades lower, they want the pullback to form a higher low or a double bottom bull flag with April 19 low and the 20-week EMA to act as support.
- Previously, the bears got a reversal from a higher high major trend reversal (against 2021 high), a large wedge pattern (Feb 2, July 27, and Mar 21) and a final flag reversal (ioi pattern in March).
- The selloff retraced more than 5% and has 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 or a double top with the March 21 high.
- 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.
- The bears need to create a few strong bear bars to increase the odds of retesting the April 19 low.
- Since this week’s candlestick is a bear doji closing around the middle of its range, it is a neutral signal bar for next week.
- The market could still be in the sideways to up phase.
- For now, traders will see if the bulls can create another bull bar or will the market continue to stall (around the all-time high area) followed by a retest of the April 19 low in the weeks ahead.
- Moving forward, if the market has entered a broad bull channel or a trading range phase, traders should expect more two-sided trading.
- If the market trades lower, traders will see if the 20-week EMA will continue to act as support.
- If the retest of the April 19 low is weak, we may be entering into a broad bull channel or a trading range phase.
The Daily S&P 500 Emini chart
- The market traded sideways earlier in the week. Thursday gapped higher but reversed into a big outside bear bar. Friday gapped up and closed as a small bull inside bar.
- Last week, we said that traders would see if the bulls can create a strong breakout above the March 21 high or will the market start to stall around the all-time high area.
- So far, the market is stalling around the all-time high area.
- Previously, the bears got a reversal from a higher high major trend reversal (against 2021 high), a large wedge pattern (Feb 2, July 27, and Mar 21) and a final flag reversal (first half of March).
- They see the current move simply as a retest of the prior high and want a reversal from a higher high major trend reversal or a double top (with the March 21 high).
- 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.
- While the bears got a strong outside bear bar on Thursday, they were not able to get follow-through selling on Friday, which indicates that they are not yet as strong as they would like to be.
- They want a breakout below the ioi (inside-outside-inside) pattern with strong consecutive bear bars closing near their lows 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 hope that the broad bull channel phase has begun.
- They got a breakout above the prior high (Mar 21), but the follow-through buying is limited so far.
- They see the small trading range (last 8 candlesticks) simply as a small pullback and want the market to resume higher.
- If the market trades lower, they want a reversal from a double bottom bull flag (with Apr 19) and a higher low.
- They want the 20-day EMA to act as support.
- So far, the market is stalling around the all-time high area.
- The market formed an ioi (inside-outside-inside) breakout mode pattern. The bulls want a breakout above while the bears want a breakout below the ioi pattern.
- Because Friday was a bull bar closing near its high, the odds slightly favour the first breakout to be above Friday’s high. The first breakout can fail 50% of the time.
- Traders will see if the bulls can create a breakout with follow-through buying or will the market continue to stall around the all-time high area.
- If the market continues to stall around the all-time high area, we may start to see more profit-taking activity in the weeks ahead.
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