E-mini Tight Bull Channel Likely to Test Moving Average

Trading Update: Monday May 18, 2026

E-mini end of day video review

S&P E-mini market analysis

E-mini daily chart

• E-mini on the daily chart has been in a tight bull channel for several weeks, testing up to the 7,500 round number last week, which is a likely area of resistance. Bulls are taking profits and bears are beginning to sell, which increases the chances of a pullback.
• The market has been away from the moving average for many bars and many weeks. This increases the odds that it will have to reach the moving average over the next several days, and therefore, the upside risk without first testing the moving average is limited.
• The market formed a buy climax last week, and then on Friday, it formed a strong reversal down. That makes me think it will probably try to test back down to the bottom of the buy climax, which is the May 12th low, and then test the moving average over the next several days.
• The odds of today forming a strong bear bar closing on its low are limited. Even though last Friday’s bar was good for the bears, the context is not great — the market is in a tight bull channel, which increases the risk of disappointment for the bears and bad follow-through.
• However, today is probably not going to form a strong buy signal bar for the bulls either, and that makes me think we will get a second leg down.
• There are probably buyers below today’s low sometime tomorrow, but with the market so far from the moving average, it may have to get there first. That means we may get a pullback that tests the moving average over the next couple of days.
• Even if we do reach the moving average, there are probably buyers not far below it.
• The daily chart is a tight bull channel, and that is a breakout on a higher time frame, such as the weekly chart. That means the downside risk is likely limited on the weekly chart as well.
• Overall, the odds are we will test the moving average, but the downside risk of the market falling far below it is limited.

E-mini 5-minute chart and what to expect today

• The market gapped up on the open and formed a bear bar, closing on its low. The bears got a small second leg down on bar 3 after the bad follow-through on bar 2, and it tested yesterday’s close (last Friday’s close).
• Bar 4 reversed strongly, along with bar 5. Bar 5 was a relatively large bar, but it was a climactic bar, and it is common for climactic bars to get bad follow-through, which it did on bar 6.
• Because of the selling pressure on the open, the odds were that today was going to form a trading range open, and that increased the risk that we would try to test breakout points, such as the bar 4 high after bar 5.
• The bears got a reversal down on bar 7, closing below the breakout point above bar 4. Bar 6 formed a bear reversal bar, and bar 7 was a follow-through bar strong enough to increase the odds of a second leg down.
• The bulls who bought the close of bar 5, scaling in lower, were likely to make money, and that is why the bulls got the reversal up on bar 8. Bar 8 was a strong enough bull bar that the odds favored at least a small second leg, and they got it after the pullback on bar 9 and bar 10.
• Even though bar 10 is a bull bar, it is testing resistance. It is the second leg after bar 8, and it is testing the bar 5 close, which increased the risk of sellers above the bar 10 high. The bears got their reversal down on bars 11 and 12.
• Bar 13 formed a surprise bear bar closing on its low as a breakout bar. Just like bar 5, it was likely to lead to bad follow-through, which it did on bar 14. It was also likely to get a second leg down, which began on bar 19 and sold off to the bar 25 low.
• The market formed a wedge with bar 4, bar 14, and bar 25. Bar 25 was a strong enough bull bar that the odds favored some kind of second leg up. Always In Bears got out above bar 25 and were likely to wait to sell until after the bulls had two clear legs up.
• They tried to get a Low 1 short on bar 30, but the bulls probably needed at least a second leg, and that increased the risk of buyers not far below bar 30. The bulls got an upside breakout on bars 33 and 34, but they failed to break above the moving average, and the bears reversed down on bar 35.
• Bar 36 was a strong enough bear bar that it may lead to a second leg down, but in reality, it is only a fair breakout below the wedge and the bar 25 low. Because today is a trending trading range day, the odds are against the bears creating a bear trend, which means there are probably buyers not far below bar 25 and the bar 36 low. That is why the bulls got their upturn on bars 37 and 38.
• As of bar 39, the bears have a Low 2 short, but with all the earlier buying pressure, the odds are against the market getting a strong breakout below bar 35. That means at minimum, we will probably test up to the bar 36 high or the bar 35 high later today, and we will probably test back to the start of the channel, which was around the bar 19 high and the bar 14 high.
• Overall, today is likely to evolve into a trading range, and the downside risk of the market falling far below bar 37 is limited.

Friday’s E-mini setups

Richard created the SP500 E-mini chart.

Here are reasonable stop entry setups from Friday. Chart shows each buy entry bar with a green arrow and each sell entry bar with a red arrow. Buyers of the Brooks Trading Course have access to a near 4-year library of detailed explanations of swing trade setups (see Online Course/BTC Daily Setups) linked to the Brooks Encyclopedia of Chart Patterns product.

The goal with these charts is to present an Always In perspective. If a trader was trying to be Always In or nearly Always In a position all day, and he was not currently in the market, these entries would be logical times for him to enter. These therefore are swing entries.

It is important to understand that most swing setups do not lead to swing trades. As soon as traders are disappointed, many exit. Those who exit prefer to get out with a small profit (scalp), but often have to exit with a small loss.

If the risk is too big for your account, you should wait for trades with less risk or trade an alternative market like the Micro E-mini.

Summary of today’s S&P E-mini price action

Richard created the SP500 E-mini chart.

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See the weekly update for a discussion of the price action on the weekly chart and for what to expect going into next week.

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Trading Room

Al Brooks and other presenters talk about the detailed E-mini price action real-time each day in the Brooks Trading Course trading room. We offer a 2 day free trial.

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Charts use Pacific Time

When times are mentioned, it is USA Pacific Time. The E-mini day session charts begin at 6:30 am PT and end at 1:15 pm PT which is 15 minutes after the NYSE closes. You can read background information on the market reports on the Market Update page.

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