Market Overview: S&P 500 Emini Futures
The S&P 500 Emini futures August candlestick low close as reversal bar near the low. Odds are September should trade at least slightly lower. Bears want another consecutive bear bar to increase the odds of the 3rd leg down of a larger wedge pattern. Bulls want a reversal higher from a higher low major trend reversal.
S&P500 Emini futures
The Monthly Emini chart
- The August monthly Emini candlestick was a bear reversal bar closing at the low with a long tail above.
- Last month, we said that odds slightly favor sideways to up as the Emini should still be in the pullback phase. Traders will have been monitoring if the bulls can create a consecutive bull bar or not. If they did, the odds of the Emini trading higher increase.
- The Emini traded up for the first 2 weeks but reversed to close at the low from mid-month onwards.
- The bulls see the move down from the January top as a two-legged pullback. They got a reversal higher from a wedge bull flag (February 24, May 20 and June 17) and a trend channel line overshoot.
- They want a second leg sideways to up from a higher low major trend reversal. They want September to close as a bull bar.
- The bulls have failed to create a consecutive bull bar in August.
- July was an inside bar; the Emini was in breakout mode. The first breakout from an inside bar can fail 50% of the time. The breakout above July failed and reversed lower.
- The bears want a 3rd leg down forming a larger wedge pattern.
- They want a continuation of the measured move down to 3450 based on the height of the 12-month trading range starting from May 2021.
- The first targets for the bears are the July inside bar low, and then a retest of the June low.
- Since August was a bear bar closing near the low, September would likely trade at least slightly lower, which it has done.
- For now, odds slightly favor sideways to down for at least for a couple of weeks in September.
- If the bears get another bear bar closing near the low, the odds of the 3rd leg down of a larger wedge pattern increase.
The Weekly S&P 500 Emini chart
- This week’s Emini candlestick was a big bear bar closing near the low with a small tail below and above.
- Last week, we said that odds are the Emini is still in the sideways to down pullback phase. Traders still expect at least a small second leg sideways to up after the pullback, but if the bears start getting consecutive bear bars closing near their lows, the odds of a retest of the June low, and a 3rd leg down of a larger wedge pattern may be forming.
- This week gapped down, but the gap closed early in the week. The Emini then continued to trade lower. This week was the 3rd consecutive bear bar since the selloff started in mid-August.
- The bears want the Emini to reverse lower around the May 4 high, or the major bear trend line, followed by a retest of the June low.
- They want a strong leg down like the one in April. The bears will need to create consecutive bear bars closing near their lows, to increase the odds of a retest of the June low. So far, they have this.
- The Emini is reversing lower from a wedge bear flag (June 28, July 29 and Aug 16).
- The selloff is strong with consecutive bear bars closing near their lows with an open gap and a micro gap. That means strong bears.
- The move up from June 17 low was in a tight channel. The bulls want a second leg sideways to up after a pullback. At the very least, they want a retest of Aug 16 high.
- They want a reversal higher from a higher low major trend reversal.
- The problem with the bull’s case is that the current selloff is very strong. Odds slightly favor the second leg sideways to up would only lead to a lower high.
- Since this week was a bear bar closing near the low, it is a good sell signal bar for next week. Next week may gap down at the open, however, small gaps usually close early.
- For now, odds are the Emini is still in the sideways to down pullback phase.
- The bulls still hope for at least a small second leg sideways to up after the pullback. Because of the strong move down, they will need a strong reversal bar or at least a micro double bottom before traders are willing to buy aggressively.
- If the bears get another strong consecutive bear bar, the odds of a retest of the June low, and a 3rd leg down of a larger wedge pattern increase.
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