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7-Bar E-mini Bull Microchannel

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Market Overview: S&P 500 E-mini Futures

The market is forming a 7-bar E-mini bull microchannel breaking above the 6900 level. The next targets for the bulls are the 7,000 and 7,100 levels. If there is a pullback, the bulls expect at least a small second leg sideways to up to retest the trend extreme high (Oct 29). The bears will need consecutive bear bars closing near their lows to show that they are regaining control.

S&P500 E-mini futures

The Monthly E-mini chart

Emini Monthly - 7-Bar Bull Microchannel, Climactic
  • The October monthly E-mini candlestick was a bull bar closing in its upper half, with prominent tails above and below.
  • Last month, traders were watching to see if the bulls could create more follow-through buying and close October as a strong bull bar, or if the market would trade slightly higher but start forming long tails above or candlesticks with bear bodies (which have not appeared since the April low).
  • The market traded lower early in the month, but there was no follow-through selling. It made a new all-time high, but closed off its high during the final days of October.
  • The bulls created a 7-bar bull microchannel, showing persistent buying pressure.
  • There may be buyers below the first pullback from such a strong microchannel.
  • The bulls reached and exceeded the 6,900 round number target in October. Their next targets are the 7,000 and 7,100 levels.
  • If there is a pullback, they expect at least a small second leg sideways to up to retest the trend extreme high (Oct 29).
  • If a deeper pullback lasting several months develops, the bulls want the December high or the 20-month EMA to act as support, forming a major higher low.
  • The bears want a reversal from a large wedge top (July 27, December 6, and October 29) and see the rally as climactic.
  • The problem for the bears is the lack of strong bear bars with follow-through selling.
  • They will need consecutive bear bars closing near their lows to show that they are regaining control.
  • So far, the move up from the April 7 low remains strong, with a tight 7-bar bull microchannel and consecutive bull bars closing near their highs.
  • The market is Always In Long.
  • While the rally appears climactic and overbought, traders will only be willing to sell aggressively when they see the bears can create strong bear bars with sustained follow-through selling.
  • There may be buyers below the first pullback following the 7-bar bull microchannel.
  • Given the climactic nature of the rally, the odds of a minor pullback are increasing. It could begin within the next couple of months.
  • For now, traders will watch to see if the bulls can create additional follow-through buying toward the next round numbers, or if the market will begin to stall, followed by a minor pullback instead.

The Weekly S&P 500 E-mini chart

E-mini Weekly - Possible Final Flag, Climactic Rally
  • This week’s E-mini candlestick was a bear doji closing in its lower half with a long tail above.
  • Last week, traders were watching to see if the bulls could create follow-through buying to reach the next round-number targets, or if the market would trade slightly higher but begin forming prominent tails or bear-bodied bars.
  • The market gapped up and made a new all-time high, but reversed and closed in its lower half by the end of the week.
  • The bears want a reversal from a wedge top (May 19, July 31, and October 29). They hope the market will form an island top with a potential gap down next week.
  • They see the recent 6-week trading range as a possible final flag in the rally and want a pullback to the October 10 low area or the 20-week EMA.
  • However, the problem for the bears is that they have not been able to create sustained follow-through selling on the weekly chart since the April 7 low.
  • They will need consecutive strong bear bars closing near their lows to demonstrate control.
  • The bulls broke above the 6-week trading range, reaching and exceeding the 6,900 round number target.
  • Their next upside objectives are the 7,000 level and a measured move projection based on the height of the recent trading range, which could take the market toward 7,100.
  • To reach these targets, the bulls must produce sustained follow-through buying.
  • If there is a pullback, they want it to be weak, with limited follow-through selling.
  • The move up since the April 21 low has been a tight bull channel, showing strong bullish momentum.
  • Buying pressure remains stronger — with consecutive bull bars — while selling pressure has been weak and lacking sustained follow-through selling.
  • Although the rally is slightly climactic and overbought (with this week’s upper tail indicating hesitation), the bears still need strong consecutive bear bars before traders will be willing to sell aggressively.
  • Traders will watch whether the bears can finally create a follow-through bear bar, something they couldn’t do since the April low.
  • Or will the market make a new all-time high but begin forming prominent tails or bear bodies instead?

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