Emini Big Bull Bar Closing above August High

Market Overview: S&P 500 Emini Futures

The S&P 500 Emini futures monthly candlestick was a big bull bar closing above August high. The bulls need to create a follow-through bull bar in July to confirm the breakout. The bears want a failed breakout above the August high and a reversal down from a double top bear (August) and a trend channel line overshoot.

S&P500 Emini futures

The Monthly Emini chart

• The June monthly Emini candlestick was a big bull bar closing near its high.
• Last month, we said that odds slightly favor the market to be in the sideways to up phase in the first part of June and if June is a big bull bar closing near its high and above August’s high, it will increase the odds of a retest near the all-time high.
• The June candlestick was a big bull bar closing near its high and above the August high.
• The bulls managed to create consecutive bull bars closing near their highs and above the 20-month exponential moving average.
• Looking back, whenever the market has consecutive bull bars closing above the 20-month exponential moving average (March & April), it has often led to at least slightly higher prices. 
• So far, the market has continued higher in June.
• The move up since March is also in a tight bull channel. That means strong bulls.
• The bulls want another strong leg up from a double bottom bull flag (Dec 22 and Mar 13), completing the wedge pattern with the first 2 legs being December 13 and February 2 highs. The third leg up is currently underway.
• The next target for the bulls is the March 2022 high. They need to create a follow-through bull bar following the breakout above the August high to increase the odds of higher prices.
• The bears see the move down from January 2022 as a broad bear channel. 
• They want a failed breakout above the August high and a reversal down from a double top bear (August) and a trend channel line overshoot.
• The problem with the bear’s case is that they have not been able to create strong selling pressure (bear bars with follow-through selling).
• As June is a bull bar closing near its high and Monday is the first trading day of the month, the Emini may gap up on the Monthly, Weekly and Daily charts. Small gaps usually close early.
• For now, odds slightly favor July to trade at least a little higher.
• Traders will see if the bulls can create another follow-through bull bar or will the Emini trade slightly higher but close with a bear body or a long tail above.

The Weekly S&P 500 Emini chart

• This week’s Emini candlestick was an outside bull bar closing near its high.
• Last week, we said that if the pullback is weak, the odds of a second leg sideways to up to retest the current leg extreme (Jun 16) will increase.
• The first breakout from an inside bar can fail 50% of the time. This week broke below the inside bar but failed and reversed to break above it afterwards.
• The bulls got a strong leg up creating the wedge pattern with the first two legs being December 13 and February 2. 
• The move up since May 24 low was in a 5-bar bull microchannel. That means strong bulls.
• There would often be buyers below the first pullback as was the case this week.
• The bulls want a breakout trading far above the August high followed by a measured move using the height of the 6-month trading range which will take them to the March 2022 high area.
• This week close above the August high. They will need to create a follow-through bull bar to confirm the breakout.
• The bears want a reversal down from a wedge pattern (Dec 13, Feb 2, and Jun 30), a double top bear flag (August) and a micro double top (Jun 16 and June 30).
• They hope to get a failed breakout above the August high. If there is a failed breakout, it would usually occur within 5 bars after the breakout.
• They want a larger pullback from the trend channel line overshoot. 
• The problem with the bear’s case is that they have not been able to create credible selling pressure with follow-through selling since the March low. 
• They will need to create consecutive strong bear bars with follow-through selling to convince traders that a deeper pullback could be underway.
• Since this week was a bull bar closing near its high, it is a buy signal bar for next week.
• The market may gap up next week. Small gaps usually close early.
• Sometimes the candlestick after an outside bar is an inside bar or has a lot of overlapping price action. It would then form an ioi (inside-outside-inside) pattern, which is a breakout mode.
• For now, the odds slightly favor the market to still be in the sideways to up phase.

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