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Emini Bull Channel

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Market Overview: S&P 500 Emini Futures

The weekly chart is possibly forming an Emini bull channel following the recent pullback. The next target for the bulls is the all-time high. They want a strong breakout into new all-time high territory, hoping that it will lead to many months of sideways to up trading. The bears want a reversal from a lower high major trend reversal (with the all-time high) and a large wedge pattern (Feb 2, July 27, and Jan 26). 

S&P500 Emini futures

The Weekly S&P 500 Emini chart

Emini Bull Channel, Emini Weekly: Bulls got Follow-through, Bull Channel Phase
  • This week’s Emini candlestick was a bull bar with a small tail above.
  • Last week, we said that the odds slightly favor the market to still be Always In Long. Traders will see if the bull can create a follow-through bull bar and resume the move higher.
  • The bulls got follow-through buying following last week’s close above the December 28 high.
  • The move up since October is in a tight bull channel. That means strong bulls.
  • The next target for the bulls is the all-time high. They want a strong breakout into new all-time high territory, hoping that it will lead to many months of sideways to up trading. (Side note: The cash index SPX or the SPY ETF has already broken out above the all-time high with follow-through buying this week).
  • Swing bulls would continue to hold their long position established at lower prices believing any pullback likely to be minor and the market has transitioned into a bull channel phase.
  • The bears hope that the strong rally is simply a buy-vacuum test of what they believe to be a 37-month trading range high.
  • They want a reversal from a lower high major trend reversal (with the all-time high) and a large wedge pattern (Feb 2, July 27, and Jan 26). 
  • They hope to get at least a TBTL (Ten Bars, Two Legs) pullback. 
  • The problem with the bear’s case is that the rally is very strong. The only bear bar in the rally had no follow-through selling.
  • They would need a strong reversal bar or at least a micro double top before they would think to sell aggressively.
  • If the market trades higher, the bears want the Emini to stall around the trend channel line area or below the all-time high area.
  • Since this week’s candlestick is a bull bar closing in its upper half, it is a buy signal bar for next week.
  • Traders will see if the bull can create another follow-through bull bar and resume the move higher.
  • For now, odds slightly favor the market to still be Always In Long. 
  • The market may have transitioned into the bull channel phase following the recent pullback. Odds slightly favor pullbacks to be minor.

The Daily S&P 500 Emini chart

Emini Daily: FT Buying, Possible Bull Channel Phase
  • The market traded higher for the week. Thursday’s and Friday’s candlesticks were doji(s).
  • Last week, we said that slightly favor the market to still be Always In Long. Traders will see if the bulls can create sustained follow-through buying above the December 28 high which will increase the odds of reaching the all-time high.
  • The bulls got the follow-through buying they wanted.
  • They got a reversal from a double bottom bull flag (Jan 5 and Jan 17) or a wedge bull flag (Dec 20, Jan 5, and Jan 17). 
  • They hope that the current rally will form a spike and channel which will last for many months after the recent pullback. 
  • They want a resumption of the trend to retest the all-time high followed by a breakout above. (Side note: The cash index SPX or the SPY ETF has already broken out above their all-time highs with follow-through buying this week).
  • If the market trades lower, they want the 20-day EMA or the bull trend line to act as support. They want an endless pullback bull trend.
  • The bears hope that the strong rally is simply a buy vacuum retest of what they believe to be a 37-month trading range high.
  • They want a reversal down from a lower high major trend reversal (against the all-time high), a large wedge pattern (Feb 2, July 27, and Jan 26) and from what they hope (recent pullback) is the final flag of the move.
  • They also see a micro double top (Jan 24 and Jan 26).
  • If the market trades higher, the bears hope that the Emini will stall around the trend channel line area or below the all-time high.
  • The bears will need to create consecutive bear bars closing near their lows and trading far below the 20-day EMA to increase the odds of a deeper pullback.
  • For now, the buying pressure remains stronger (tight bull channel, small pullback) as compared with the selling pressure (e.g., weaker bear bars with no follow-through selling). 
  • Odds slightly favor the market to still be Always In Long.
  • Traders will see if the bulls can continue to create sustained follow-through buying to reach the all-time high.
  • The market likely has transitioned into a bull channel phase after the recent pullback. Traders should be prepared to see more frequent minor pullbacks forming.

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