Market Overview: S&P 500 Emini Futures
The S&P 500 Emini futures weekly candlestick was a follow-through bear bar after last week’s break below the inside doji. The bears need to create consecutive bear bars closing near their lows to increase the odds of lower prices. The bulls hope the pullback will result in a higher low and want another strong leg up forming a wedge pattern with the first two legs being December 1 and February 2.
S&P500 Emini futures
The Weekly S&P 500 Emini chart
- This week’s Emini candlestick was a bear bar closing near its low with a prominent tail below.
- Last week, we said that traders will see if the bears can get follow-through selling following the breakout below the inside bar, or will the bulls get a retest of the February 2 high within the next few weeks.
- The bears managed to get strong follow-through selling this week testing the 20-week exponential moving average.
- They see the prior move up to February 2 high 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 down from a lower high major trend reversal.
- 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 bears want a retest of the October low followed by a strong breakout and a continuation of the bear trend.
- 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, an inverted head and shoulders pattern often ends up as a bear flag instead of a reversal pattern.
- While next week may trade slightly lower, the bulls want the Emini to close with a bull body or with a prominent tail below.
- They hope that the current pullback will form a higher low, followed by another leg up forming a wedge pattern with the first two legs being December 1 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.
- 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.
- If the bear continues to get consecutive bear bars closing near their lows, it could be the start of the bear leg within the large trading range.
- For now, odds slightly favor the Emini to trade at least a little lower.
- Traders will see if the bears can continue to create strong bear bars or will the Emini stall at a higher low (Dec low) potentially setting up for another third leg up.
The Daily S&P 500 Emini chart
- The Emini gapped down on Tuesday and traded sideways to down for the rest of the week. Friday gapped down once again but reversed to close as a small bull doji.
- 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 10, Feb 17 and Feb 24) and a trend channel line overshoot.
- The pullback has some overlapping price action with dojis, and weak bear bars with long tails below. The bears are still not very 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 see the recent moves in February simply as a pullback and want at least another leg higher to retest February 2 high.
- They hope the pullback will remain at a higher low (against Dec low). They want another big leg up, completing the wedge pattern with the first two legs being December 1 and February 2.
- They need to break far above the December high and August high, to convince traders that the selloff from January 2022 has ended.
- For now, 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.
- Poor follow-through and reversals are more common within a in trading ranges.
- If there is a pullback higher, odds slightly favor at least a small second leg sideways to down to retest February low.
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