Emini Pullback to the 20-Week EMA

Market Overview: S&P 500 Emini Futures

The market formed an Emini pullback to the 20-week EMA on the weekly chart. The bulls see this week simply as a pullback and want the market to resume higher from a double bottom bull flag (Nov 4 and Dec 20). The bears hope to get a TBTL (Ten Bars, Two Legs) pullback lasting at least a few weeks. If the market trades higher, they want a lower high major trend reversal and a double top.

S&P500 Emini futures

The Weekly S&P 500 Emini chart

• This week’s Emini candlestick was a bear bar closing below the middle of its range with a long tail below.
• Last week, we said that traders would see if the bears could create follow-through selling by creating a strong sell entry bar or if the market would stall sideways.
• The bears managed to create a bear entry bar, but the long tail below indicates that the bears are not yet as strong as they hope to be.
• They got a reversal from a large wedge (Mar 21, Jul 16, and Dec 6), an embedded wedge (Aug 30, Oct 17, and Dec 6) and a micro wedge (Nov 22, Nov 29, and Dec 6).
• They see the market as being extended and overbought.
• The bears hope to get a TBTL (Ten Bars, Two Legs) pullback lasting at least a few weeks.
• If the market trades higher, they want a lower high major trend reversal and a double top.
• The bulls created a large wedge pattern (Mar 21, Jul 16, and Dec 6), an embedded wedge (Aug 30, Oct 17, and Dec 6) and a micro wedge (Nov 22, Nov 29, and Dec 6).
• They see the market as being in a broad bull channel and want the market to continue sideways to up for many months.
• They see this week simply as a pullback and want the market to resume higher from a double bottom bull flag (Nov 4 and Dec 20).
• They want the 20-week EMA or the bull trend line to act as support.
• They hope that the pullback will have poor follow-through selling.
• Since this week’s candlestick is a bear bar closing in its lower half with a long tail below, it can be a sell signal bar albeit weaker.
• Traders will see if the bears can create more follow-through selling.
• Or will the market retest the all-time high (Dec 6) instead?
• The bears need to do more and create sustained selling pressure to convince traders that they are back in control.
• If the pullback remains sideways and shallow (overlapping candlesticks, with bull bars, doji(s), and candlesticks with long tails below), the odds of a resumption higher will increase.

The Daily S&P 500 Emini chart

• The market traded sideways early in the week. The Emini formed a big bear bar on Wednesday but lacked sustained follow-through selling on Thursday and Friday.
• Last week, we said that traders would see if the bears could create follow-through selling trading far below the 20-day EMA or if the pullback would be sideways, shallow and stall around the 20-day EMA or the bull trend line area instead.
• The bulls see the market trading in a broad bull channel and want the move to continue for months. They want an endless pullback bull trend.
• They see this week as a pullback forming a higher low.
• They want a retest of the all-time high (Dec 6) from a double bottom bull flag (Nov 4 and Dec 20) and a micro double bottom (Dec 18 and Dec 20).
• They want the 100-day EMA to act as support.
• The bears got a reversal from a large wedge pattern (Mar 21, Jul 16, and Dec 6) and an embedded wedge (Aug 30, Oct 17, and Dec 6).
• They see the move up from October 2023 as extended and overbought.
• They want a pullback lasting at least a few weeks – a TBTL (ten bars, two legs) pullback.
• If the market trades higher, they want a reversal from a lower high major trend reversal or a double top with the all-time high.
• They need to create consecutive bear bars closing near their lows trading far below the 100-day EMA and the bull trend line to show they are back in control.
• The market formed a pullback this week but lacked sustained follow-through selling.
• Traders are wondering if this is enough to alleviate the overbought condition.
• The lack of follow-through selling indicates that the bears are not yet as strong as they hoped to be.
• For now, traders will see if the bulls can create a retest of the all-time high and a breakout above within the next few weeks.
• Or will the bears be able to create a second leg sideways to down instead?

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