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Monthly Emini Reversal Bar

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Market Overview: S&P 500 Emini Futures

The market formed a monthly Emini reversal bar in October. The bears want a reversal from a wedge (Mar 21, Jul 16 and Oct 17) and an embedded wedge (Mar 21, Jul 16 and Oct 17). To increase the odds of a deeper pullback, they must create a strong entry bar with follow-through selling in November. If there is a pullback, the bulls want it to be sideways and shallow (filled with weak bear bars, bull bars, doji(s) and overlapping candlesticks) and form a higher low or a double bottom bull flag with the September low.

S&P500 Emini futures

The Monthly Emini chart

Emini Monthly - Wedge, Embedded Wedge, Reversal Bar, Monthly Emini Reversal Bar
  • The October monthly Emini candlestick was a bear reversal bar closing near its low with a long tail above.
  • Last month, we said that the odds slightly favor October trading at least a little higher. Traders would see if the bulls could create another strong breakout into new all-time high territory or if the market would trade higher but stall and close the month’s candlesticks with a long tail or a bear body instead.
  • The market traded higher most of the month but reversed into a bear reversal bar on the last trading day.
  • The bulls made a new all-time high in October but have not been able to create another follow-through bull bar.
  • They got another leg up, completing the wedge pattern (Mar 21, Jul 16 and Oct 17).
  • They also got the third leg up completing the embedded micro wedge pattern (Aug 30, Sep 26, and Oct 17).
  • If there is a pullback, the bulls want it to be sideways and shallow (filled with weak bear bars, bull bars, doji(s) and overlapping candlesticks) and form a higher low or a double bottom bull flag with the September low.
  • If there is a deep pullback, they want the bull trend line or the 20-month EMA to act as support.
  • The bears want a reversal from a wedge (Mar 21, Jul 16 and Oct 17) and an embedded wedge (Mar 21, Jul 16 and Oct 17).
  • The problem with the bear’s case is that they have not yet been able to create bear bars with follow-through selling (since Oct 2023).
  • To increase the odds of a deeper pullback, they must create a strong entry bar with follow-through selling in November.
  • Since October candlestick was a bear reversal bar closing near its low, it is a sell signal bar for November.
  • The market remains Always In Long.
  • However, the move up since October 2023 has lasted a long time and is slightly climactic.
  • Traders will see if the bears can create a strong follow-through bear bar (an entry bar) in November.
  • Or will the market trade slightly lower but stall and close with a long tail or a bull body instead (like Aug and Sept)?
  • There may be some extreme volatility around Election Day early in the month.

The Weekly S&P 500 Emini chart

Emini Weekly - Minor Pullback, Bears Need More FT
  • This week’s Emini candlestick was a bear bar closing near its low with a small tail below.
  • Last week, we said that traders would see if the bears could create a follow-through bear bar, something they have could not do since July or if the bulls would make a new all-time high instead.
  • The market traded lower for the week forming a follow-through bear bar.
  • The bears want a reversal from a higher high major trend reversal.
  • They hope that the recent sideways candlesticks (mid-Sept to early Oct) will be the final flag of the move.
  • They want a reversal from a large wedge (Mar 21, Jul 16, and Oct 17) and an embedded wedge (Aug 30, Sep 25, and Oct 17).
  • They need to create consecutive bear bars closing near their lows to increase the odds of a deeper pullback.
  • The next targets for the bears are the 20-week EMA and the September low.
  • The bulls see the market as being in a broad bull channel.
  • They got another leg up completing the wedge pattern (Mar 21, Jul 16, and Oct 17) and the embedded wedge in the current leg up (Aug 30, Sep 26, and Oct 17).
  • They see another possible embedded wedge forming (the first two legs are Sept 26 and Oct 17) and want another small leg up.
  • They want the market to form another higher low followed by a retest of the all-time high.
  • They want the 20-week EMA or the bull trend line to act as support.
  • Since this week’s candlestick is a bear bar closing near its low, it is a sell signal bar for next week.
  • The minor pullback is currently underway.
  • Odds slightly favor the market to trade at least a little lower.
  • Traders will see if the bears can create another follow-through bear bar (preferably closing below the 20-week EMA).
  • Or will the pullback stall around the 20-week EMA area and the weekly candlestick close with a long tail or a bull body instead?
  • For now, odds slightly favor the pullback to be minor and not lead to a reversal.
  • Traders should be prepared for volatility around Election Day.

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