The monthly S&P500 Emini candle closed on Tuesday and created a bear reversal bar
The monthly Emini has been this overbought only three times in the past 20 years, and each of those prior times was followed by a reversal of at least 20%. When this week fell below last month’s low, the Emini triggered a sell signal on the monthly chart. It also did this in August, and that makes this current sell signal a second signal. This increases the chances that the bears will be able to create a pullback that lasts at least a few bars (months).
Since the monthly chart is in such a strong bull trend, the downside is probably limited. However, it should work its way sideways to down to the moving average, which currently is around 1800.
The weekly S&P500 Emini candle chart had bad follow-through selling after triggering a sell signal 2 weeks ago.
The weekly Emini chart fell below its moving average, but reversed up to close above the average. With its close near the open, the candle became a big doji bar. It is a trading range bar in the middle of a 4 month trading range.
The daily S&P500 Emini candle chart had a bear breakout, but bad follow-through
Today completed a reversal of Wednesday’s strong bear trend. However, the Emini is in the middle of a 4 month trading range so the follow-through will probably be bad and result in more sideways trading.