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Weekly Emini Bulls Need Follow-through Buying

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Market Overview: S&P 500 Emini Futures

The weekly Emini bulls need follow-through buying following the breakout above the ioi pattern to increase the odds of another strong leg up. The bears must create strong bear bars trading below the 20-week EMA and the bull trend line to show they are back in control.

S&P500 Emini futures

The Weekly S&P 500 Emini chart

Emini Weekly - Bulls Need Follow-through Buying, Weekly Emini Bulls Need Follow-through Buying
  • This week’s Emini candlestick was a bull bar closing near its high with a small tail above.
  • Last week, we said the market formed an ioi (inside-outside-inside) pattern and is in breakout mode. The bulls want a breakout above, while the bears want a breakout below the ioi pattern.
  • The bull got a breakout above the ioi pattern.
  • They see the selloff (Apr 7) forming a major higher low and the market is in a broad bull channel.
  • They hope that the strong selloff has alleviated the prior overbought condition. They want a resumption of the trend.
  • They hope the market has flipped into Always In Long.
  • They want a retest and breakout above the all-time high (Dec 6).
  • They need to create a follow-through bull bar following this week’s breakout above the ioi pattern to increase the odds of another strong leg up.
  • The bears see the current move as a retest of the prior trend’s extreme high (Dec 6).
  • They want the market to form a lower high major trend reversal or a double top with the December 6 high.
  • They must create strong bear bars trading below the 20-week EMA and the bull trend line to show they are back in control.
  • So far, the buying pressure since the April 7 low has been stronger (strong bull bars closing near their highs) than the weaker selling pressure (bear bar with limited follow-through selling).
  • The market likely has flipped into Always In Long.
  • The market could still trade slightly higher.
  • Traders will see if the bulls can create follow-through buying next week.
  • Or will the market trade slightly higher but stall, forming candlesticks with long tails above or with bear bodies in the weeks ahead?

The Daily S&P 500 Emini chart

Emini Daily - Bears Want TBTL PB, Bulls Need FT Buying
  • The market traded higher in the first half of the week. Thursday was an outside bear bar, but there was no follow-through selling. The market gapped up on Friday.
  • Previously, we said the odds favor any pullback to be minor and traders expect at least a small sideways to up leg to retest the prior leg high (May 19) after the pullback.
  • The market formed a pullback to the 20-day EMA followed by a retest of the May 19 high this week.
  • The bulls got a strong reversal in a tight bull channel.
  • They see the selloff forming a major higher low (Apr 7) and want the broad bull channel to continue.
  • They hope the selloff has alleviated the prior overbought condition and that the market has flipped into Always In Long.
  • They want a retest of the all-time high followed by a breakout above.
  • If the market trades lower, they want the May 23 low or the 20- or 200-day EMA to act as support.
  • The bears see the current move as a retest of the prior trend extreme high (Dec 6).
  • They want the market to form a lower high major trend reversal and a double top.
  • They see a wedge forming in the current leg up (May 2, May 19, and Jun 6).
  • They want a TBTL (Ten Bars, Two Legs) pullback lasting a few weeks.
  • They must create consecutive bear bars closing near their lows trading far below the 200-day EMA to show they are back in control.
  • The move from the April 21 low is in a tight bull channel which means strong bulls.
  • The market likely has flipped into Always In Long.
  • The move has lasted a long time and is slightly climactic. A minor pullback could form within the next few weeks.
  • If a pullback forms, traders will see the strength of the move. If it remains shallow and weak and holds around the 20-day EMA or the 200-day EMA, the odds of another leg up will increase.
  • For now, traders will see if the bulls can create more follow-through buying.
  • Or will the market stall and form a TBTL (Ten Bars, Two Legs) pullback within the next few weeks instead?

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  • Hello Andrew,

    I got a bit confused by your comment:
    “The bull got a breakout above the IOI pattern.”

    From what I see, most of the bull bar overlaps the IOI pattern. To me, it looks more like an attempt to break out rather than a clean breakout. If it fails, I imagine it could reverse all the way down to the prior low, potentially forming a Final Flag.

    I always understood that a breakout usually has most of the body outside the prior bar. But since you mentioned it is a breakout, I’m wondering—
    is it considered a breakout specifically in the context of IOI patterns, even if much of the bar overlaps?

    Thank you!

    • Ola Leo, a good day to you..

      Just my 2 cents..

      In terms of a breakout above the inside bar, it does look decent, considering it also closed above the May 19 swing high, closing the week with a strong bull bar.

      What would have been weak would be, market breaking out above the inside bar, then reversed to breakout below the inside bar and closing as an outside bear bar near its low with a long tail above..

      For now, the bulls still need to create follow-through buying to confirm the breakout.. I would not under estimate the bulls still..

      Let’s see how the market plays out..

      Have a great week ahead!

      Best Regards,
      Andrew

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