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Weekly Emini Bulls Want a Second Leg Up

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Market Overview: S&P 500 Emini Futures

The weekly Emini bulls want a second leg up to retest the 20-week EMA or the March 25 high. They must create strong consecutive bull bars to increase the odds of higher prices. The bears want the third leg down completing the wedge pattern after the pullback (the first two legs being the Mar 13 and Apr 4 lows).

S&P500 Emini futures

The Weekly S&P 500 Emini chart

Emini Weekly - Bulls Want 2nd Leg Up; Bears Want Retest Low, Weekly Emini Bulls Want a Second Leg Up
  • This week’s Emini candlestick was an inside bear bar closing in its lower half with a prominent tail below.
  • Last week, we said the market may still be in the sideways to up pullback phase. Traders would see if the bulls could create strong follow-through buying or fail to do so.
  • The market gapped higher this week but lacked sustained follow-through buying.
  • The bulls see the current move forming a major higher low and this week as a pullback.
  • They want a second leg sideways to up to retest the 20-week EMA or the March 25 high.
  • They hope the July 27 high, the bull trend line, and the 200-week EMA will act as support.
  • They must create strong consecutive bull bars to increase the odds of higher prices.
  • The bears got a large 2-legged selloff testing the 200-week EMA.
  • They have a tight bear channel which means strong bears.
  • They want the third leg down completing the wedge pattern after the pullback (the first two legs being the Mar 13 and Apr 4 lows).
  • They expect to get at least a small sideways to down leg to retest the recent leg extreme low (April 7) even if it only forms a higher low.
  • They want the pullback to be weak and sideways (overlapping candlesticks, doji(s), bear bars, long tails above candlesticks).
  • If the market trades higher, they want it to stall below the March 25 high, forming a large double top bear flag.
  • They want the 100-week EMA, the bear trend line or the 20-week EMA to act as resistance.
  • The market may still be Always In Short.
  • The selloff was slightly climactic and oversold.
  • The lack of follow-through buying this week indicates the bulls are not yet strong.
  • The market could still be in the sideways to up pullback phase for next week.
  • Traders will see if the bulls can create at least a small second leg sideways to up leg to retest the April 9 high.
  • Or will the bears be able to create a follow-through bear bar instead? If this is the case, it could lead to a retest of the April 7 low.
  • For now, the odds slightly favor at least a small sideways to down leg to retest the April 7 low after the pullback, even if it only forms a higher low.

The Daily S&P 500 Emini chart

Emini Daily - Bulls Want Retest of 200-Day EMA, Bears Retest Low
  • The market gapped up on Monday but lacked follow-through buying. The market traded sideways to down for the week.
  • Last week, we said the market could still be in the sideways to up pullback phase. Traders would see if the bulls could create strong bull bars breaking far above the 20-day EMA and the bear trend line, or if the pullback would lack strong follow-through buying.
  • The bulls want a reversal from a climactic selloff.
  • At the least, they want a larger second leg sideways to up, trading above the 20-day EMA.
  • They want a retest of the March 25 high and the 200-day EMA.
  • They must create consecutive bull bars closing near their highs to show they are back in control.
  • They want any pullback to be weak and sideways, lacking follow-through selling (overlapping candlesticks, bull bars, doji(s), and long tails below candlesticks).
  • The bears created a large 2-legged selloff by more than 20%. The bears are strong.
  • They see the current move as a pullback following a climactic selloff.
  • They want the market to form a lower high and a double top bear flag with the March 25 high.
  • They hope the 20-day EMA, the bear trend line, or the March 25 high will act as resistance.
  • They want the pullback to be weak and lack sustained follow-through buying (overlapping candlesticks, bear bars, doji(s), long tails above candlesticks).
  • The market formed a small second leg sideways to up this week, but it lacked strong follow-through buying.
  • The market could still be in the sideways to up pullback phase.
  • Traders will see if the bulls can create strong bull bars breaking far above the 20-day EMA and the bear trend line.
  • Or will the market stall below the 20-day EMA or the April 9 high followed by a retest of the April 7 low instead?
  • The selloff is strong enough for traders to expect at least a small sideways to down leg to retest the April 7 low after the pullback, even if it only forms a higher low.

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  • Hello Andrew! Great work!
    Below I will list my reasons to why I am expect more for another leg dn:

    Weekly Chart:
    – After 2 weeks of really wide ranges, probably with standard deviation >3, the odds were high for a small range in the last week’s range — which makes sense because volatility tends to cycle: it expands, then contracts, contracts, then expands.

    – On the weekly chart, buyers didn’t push the price up enough to hit key levels like the 3/25 low or the 3/13 BOP, which would usually trigger a proper sell-off. But at the same time, sellers showed strength by keeping those gaps open, which increases the chances of a second leg down.

    – The market formed an inside bar, and IBs usually aren’t great breakout bars. That leans toward any downside move being maybe the last push from sellers for a while.

    – Also important: in PW, usually corrections don’t overlap — and that’s exactly what happened here. The two pullbacks stayed clean without overlapping.

    Daily Chart:
    – On the daily chart, buyers built a bull leg which was also a W BR leg implied due the PB along the way up to the EMA resistance, and then a micro double top (DT) right at the BOP resistance. That caught the sellers’ attention, and they managed a bear BO with FT.

    – I’m expecting a move down this week.

    – The last daily bar was an inside bar (IB), and IBs usually make for bad breakout, which increase the chance to be the last move Dn for a while.

    Note: I really like how you also consider the bull scenario, even with the strength from the bears. But for me, it’s hard to think about a real reversal here without buyers at least putting in a higher low (HL) first.

    • Ola Filipe Ciervo,

      Thanks for sharing your thoughts.. yes, what you said made sense..

      The odds slightly favor a retest of the April 7 low at some point.. the only challenge is that I find it hard to predict how long this pullback would last..

      We’re in the type of market where you can go to sleep, and then wake up to find the market has a huge gap up or gap down because someone said something silly.. I find it a bit harder to make a high confidence call..

      In these types of market conditions, for me personally, is to scale back the size of trades or just sit it out.. wait for some stability to return where it feels easier to trade..

      Once again, thanks for your great input! They are insightful.. Have a blessed week ahead Filipe!

      Best Regards,
      Andrew

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