Market Overview: S&P 500 Emini Futures
The S&P 500 Emini futures bears got a weak second breakout attempt below the June low, however, the weekly candlestick had a long tail below. The first 2 legs of the wedge had at least 3 candlesticks. Unless there is a surprisingly big reversal up, the bears expect this leg to have at least 2-3 candlesticks too.
Bulls want a reversal up from a wedge bottom (Feb 24, June 17 and Oct 13) with a nested wedge (Sept 6, Sept 30 and Oct 13).
S&P500 Emini futures
The Weekly S&P 500 Emini chart
- This week’s Emini candlestick was a bear bar with a long tail below, closing slightly above Sept low.
- Last week, we said that the odds slightly favor sideways to down and traders will see if the bears get another breakout attempt below the June low, or if next week closes with a bull body instead.
- This week traded below Sept low, but reversed back higher, closing slightly below the middle of the bar.
- The bears wanted a strong leg down like the one in April and a retest of the June low. They got what they wanted.
- The selloff from August is in a tight bear channel. That means strong bears.
- This week was another, albeit weak second breakout attempt below the June low, but the long tail below indicates that the bears are not as strong as they could have been.
- They want next week to be a bear follow-through bar to confirm the breakout.
- The bears want a measured move down to around 3450 based on the height of the 12-month trading range starting from May 2021, or the big round number 3400 which is also 2020 high.
- If the Emini trades higher, the bears want a reversal lower from a lower high around the bear trend line, or the 20-week exponential moving average, or around October 5 high.
- The first 2 legs down since August had at least 3 bear bars. The current 3rd leg only has one. Unless there is a surprisingly big reversal up, the bears would expect at least 2-3 candlesticks in this 3rd leg down.
- The bulls want a reversal higher from a double bottom major trend reversal with the June low and a wedge bottom (Feb 24, June 17 and Oct 13) with a nested wedge (Sept 6, Sept 30 and Oct 13).
- Because of the strong selloff, the bulls will need a strong reversal bar, or at least a micro double bottom before they would be willing to buy aggressively.
- While this week had a bear body, it has a long tail below. It has the look of a weak reversal bar.
- They will need to create consecutive bull bars closing near their highs trading far above October 5 high to convince traders that a reversal may be underway and prevent a strong breakout below the June low.
- The problem with the bull’s case is that the recent selloff was very strong. The sideways to up leg may only lead to a lower high.
- The last 2 candlesticks had long tails above and below with small bull and bear bodies. Big up, Big down, big confusion. That is a sign of trading range price action.
- The Emini may be forming a small trading range around the June low between 3500 and 3800.
- For now, we may start to see some sideways trading price action around the June low.
- If there is a breakout, sideways to down is slightly more likely.
The Daily S&P 500 Emini chart
- The Emini traded slightly lower on Monday followed by weak follow-through. Thursday gapped down but reversed up into a surprise big bull bar. Friday traded slightly higher but reversed into a bear bar closing near the low.
- Last week, we said the odds slightly favor sideways to down and if the bears get a strong breakout below the September low, with follow-through selling early next week, the odds of them reaching the targets below increase.
- While this week broke far below Sept low, the bears did not get follow-through selling below it. The bulls on the other hand failed to get a follow-through bar after Thursday’s surprise big bull bar.
- The bulls see the strong selloff simply as a sell vacuum testing June low within a trading range.
- They want a reversal higher from a double bottom with the June low and a wedge bull flag (Aug 23, Sept 6 and Oct 13). They also have a nested wedge (Sept 6, Sept 30 and Oct 13).
- The bulls will need to create consecutive bull bars closing near their highs soon to prevent a breakout, and follow-through selling below the June low.
- The problem with the bull’s case is that the selloff from August 16 was very strong. Sideways to up pullbacks may only lead to a lower high.
- The 20-day exponential moving average and bear trend line remains resistances above.
- If the Emini trades higher, the bears want a reversal lower from a double top bear flag with October 5 high, or around the bear trend line or the 20-day exponential moving average.
- This week reversed lower from the 20-day exponential moving average again.
- The bears want another breakout attempt below Sept low, followed by a breakout and a measured move down to 3450 or slightly lower around the 3400 big round number which is also 2020 high.
- Bears want at least another leg down forming the wedge pattern with the first two legs being September 6 and September 30.
- They got that this week, however the lack of follow-through selling created a truncated 3rd leg down. The first 2 legs down had more bars and lasted more days.
- Unless there is a surprisingly big reversal up, bears will expect the 3rd leg to last at least a while longer.
- They hope to get at least a small second leg lower testing Oct 13 low.
- The Emini is currently forming a small trading range around the June low around 3500 and 3800.
- We may continue to see more sideways trading range price action until a strong breakout from either direction.
- If there is a breakout, sideways to down is slightly more likely.
Traders can see the end of the day bar-by-bar price action report by signing up for free at BrooksPriceAction.com. Al talks about the detailed Emini price action real-time throughout the day in the BrooksPriceAction.com trading room. We offer a 2 day free trial.
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Thanks for your analysis Andrew! How much do you think there might be a parallel to the higher low DB around March (~ 4150), that led to a Measured Move down? That would bring the next MM down from the higher low DB in June (around 3700) to 3150.
I would give it a low probability though considering we’ve had several legs down already since August highs, and should by this time be at least making a close above the daily 20EMA (on average 25 bars between close below 20EMA and close above 20EMA). Bears getting exhausted and all.
Thanks, and all best!
Hi Sybren, a good day to you.
A good question.. so far I’m not yet looking so far yet due to the wedge and nested wedge.
For now there is still no strong reversal up setup, and want to see if one forms within the next few weeks..
And if it does bounce, how strong it is, and whether it stalls and creates a lower high..
If it is weak, and everyone agrees that another leg down is warranted, the climax leg down can be sharp and break many supports.. so I wouldn’t write off the measured move you have mentioned..
However for now, I would prefer to take things step by step and see how things unfolds week by week..
Have a great week ahead!
Good points, Andrew, thanks a lot. I agree, on higher timeframes a lot is possible in either directions which makes estimation of probabilities pretty pointless 😉
Take care and wishing a great week ahead to you Sybren.. be well! 🙂