Market Overview: S&P 500 Emini Futures
The S&P 500 Emini futures weekly chart formed a pair of Emini consecutive dojis. There are often buyers below the first pullback from a strong channel up like the tight 8-bar bull micro channel. The bulls hope to get at least a retest of February high. The bears need to create strong follow-through selling next week to increase the odds of a test of the 20-week exponential moving average.
S&P500 Emini futures
The Weekly S&P 500 Emini chart
- This week’s Emini candlestick was bear doji closing above last week’s low.
- Last week, we said that while we may see some pullback, odds slightly favor the Emini to still be in the sideways to up phase.
- This week broke below last week’s low, ending the 8-bar bull micro channel streak.
- The bears see the current move up simply as a continuation of the move which started in October 2022.
- They want a reversal down from a higher high major trend reversal. If the Emini trades higher, they want a reversal lower from a double top with February 2 high.
- Because of the strong move-up, the bears will need a strong reversal bar or a micro double top before they would be willing to sell more aggressively.
- While some traders may view December high as a major lower high, the bears want a break above the August high to be sure of the end of the bear trend.
- The Emini consecutive dojis indicate the bears are not yet as strong as they would like to be.
- They need to create strong follow-through selling next week to increase the odds of a test of the 20-week exponential moving average.
- The bulls got a larger second leg sideways to up from the rally which started in October 2022.
- They see the last 6 months as forming an inverted head and shoulders, with the December low being the right shoulder.
- However, inverted head and shoulders pattern often end up as bear flags instead of a reversal pattern.
- They want another strong leg up completing the wedge pattern with the first two legs being January 17 and February 2.
- By breaking above the December high, they hope the bear trend of successively lower highs and lower lows has ended.
- They need to break far above the December high and August high to signal the end of the selloff.
- The bulls had an 8-bar bull micro channel streak which was broken this week. There may be buyers below the first breakout below such a strong bull micro channel.
- However, if the bears continue to get consecutive bear bars, it could be the start of a deeper pullback.
- After the spike and broad channel down from January 2022, the Emini may have transitioned into a trading range phase between 4300 and 3500.
- The move up from October 2022 may simply be a bull leg within a trading range.
- Traders will see if the bears can get follow-through selling following this week’s breakout below the inside bar or will the bulls get a retest of the February 2 high within the next few weeks.
The Daily S&P 500 Emini chart
- The Emini traded sideways to up from Monday to Wednesday. Friday’s candlestick gap below the 20-day exponential moving average but reversed to close as a bull reversal bar near its high.
- Last week, we said until the bears can create strong consecutive bear bars, odds slightly favor the Emini to still be in the sideways to up phase.
- The bears see the move up from October simply as a 2-legged swing up and want a reversal down from a higher high major trend reversal.
- So far, the pullback has 3 pushes therefore a wedge (Feb 6, Feb 10 and Feb 17).
- The pullback has a lot of overlapping price action. The bears are still not yet strong.
- If the Emini trades higher, the bears want a reversal down from a lower high major trend reversal or a double top with February 2 high.
- The bears see the selloff from January 2022 as a broad bear channel, even though the Emini has traded slightly above the December high.
- They need the Emini to trade far above the August high to believe the broad bear channel has ended.
- The bears need to create consecutive bear bars closing near their lows to convince traders that a deeper pullback is underway.
- The bulls got a larger second leg sideways to up from a double bottom bull flag (Nov 3 and Dec 22) and a higher low major trend reversal.
- They then got a breakout above December high but did not get sustained follow-through buying.
- By trading above the December high, the bulls hope that the broad bear channel has ended, and the market has either transitioned into a trading range or a bull trend.
- The bulls hope that the recent moves were simply a pullback and want at least another leg higher to retest February 2 high.
- They hope that the 20-day exponential moving average will act as support.
- They need to break far above the December high and August high, to convince traders that the selloff from January has ended.
- Since Friday was a bull reversal bar closing near its high, it is a buy signal bar for next week.
- For now, until the bears can create strong consecutive bear bars, odds slightly favor the Emini to still be in the sideways to up phase.
- Monday is a trading holiday honoring George Washington’s Birthday.
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