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E-mini Broke Out Below the Tight Trading Range

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Market Overview: S&P 500 E-mini Futures

The S&P 500 E-mini broke out below the tight trading range this week. Bears need strong follow-through selling next week to shift the market to Always In Short. Bulls want the breakout below the tight trading range to fail, followed by a retest of the all-time high (January 28).

S&P500 E-mini futures

The Weekly S&P 500 E-mini chart

E-mini Weekly - BO Below TTR, Bears Need FT Selling, E-mini Broke Out Below the Tight Trading Range
  • This week’s Emini candlestick was a bear bar closing near its low with a long tail above.
  • Last week, we said traders were watching for a decisive breakout either below the 20-week EMA or above the all-time high before trading aggressively.
  • The market broke out below the 13-week tight trading range this week.
  • Bears want a reversal from a wedge top (December 11, December 26, January 12) and a lower high major trend reversal (February 25).
  • Bears want a strong breakout below the tight trading range and the 20-week EMA, followed by a measured move toward 6,500, based on the height of the 13-week trading range.
  • They need strong follow-through selling next week to shift the market to Always In Short.
  • If the market trades higher, bears want the February 25 high to act as resistance, forming a double top bear flag.
  • Bulls see the current move as forming a large double bottom bull flag (December 17 and March 6) and a wedge bull flag (January 20, February 17, March 6).
  • They want the breakout below the tight trading range to fail, followed by a retest of the all-time high (January 28).
  • Bulls want the 20-week EMA to hold as support. If the market trades lower, they want the November 21 low to act as support, forming a large double bottom bull flag.
  • Bulls need consecutive strong bull bars to increase the odds of a successful breakout above the January 28 high, with a measured move target near 7,300 based on the height of the 13-week trading range.
  • So far, the market has broken out below the 13-week tight trading range and the 20-week EMA.
  • Traders are watching whether bears can generate follow-through selling next week. If they fail, the market may retest back into the tight trading range.
  • The market continues to form slightly lower highs (February 11 and February 25). If the market trades higher, traders will watch whether it stalls around the 20-week EMA or the February 25 high area and forms another lower high relative to the January 28 all-time high.
  • Traders are watching whether the market is in a multi-month distribution phase or forming a large bull flag ahead of another leg up.
  • The longer price stalls near the October 29 high without a strong breakout, the greater the probability of a deeper pullback — especially if bears generate sustained follow-through selling next week.

The Daily S&P 500 E-mini chart

E-mini Daily - Weak Breakout Below Tight Trading Range
  • The market opened lower on Monday and Tuesday, and both days reversed to close with bull bodies. Wednesday retested the 20-day EMA, followed by a retest of Tuesday’s low on Friday.
  • Previously, we said traders were watching whether bulls could retest the January 28 high and break out to new all-time highs, or whether the market would continue making slightly lower highs, increasing the odds of a downside breakout from the trading range.
  • The market broke out below the tight trading range this week, but the candlesticks consist mostly of bull bars with prominent tails below and dojis, indicating a weak breakout.
  • Bulls see a large double bottom bull flag (November 21 and March 6), a wedge bull flag (January 20, February 17, and March 6), and a micro double bottom (March 3 and March 6).
  • Bulls want the November 21 low or the 200-day EMA to act as support.
  • They want the breakout below the 13-week tight trading range to fail, followed by a retest of the January 28 high and a strong breakout with a measured move target near 7,300, based on the height of the 13-week trading range.
  • Bulls need consecutive strong bull bars to show they are back in control.
  • Bears want the 20-day EMA to act as resistance, which appears to be the case so far.
  • They want a strong breakout below the 13-week trading range, followed by a measured move toward 6,500, based on the height of that range.
  • If the market trades higher, bears want the 20-day EMA or the February 25 high to act as resistance, forming a double top bear flag.
  • Bears need consecutive strong bear bars breaking below the November 21 low and the 200-day EMA to flip the market to Always In Short.
  • The market broke out below the 13-week tight trading range this week, but the lack of consecutive strong bear bars indicates the bears are not yet decisively strong.
  • Traders are watching whether bears can generate further follow-through selling, or whether bulls can produce consecutive strong bull bars back into the tight trading range instead.
  • If the market trades higher but continues forming slightly lower highs — with prominent bear bars, weak bull bars, and tails above — the odds of a downside breakout increase.
  • Traders are watching whether the market is in a multi-month distribution phase or forming a large bull flag ahead of another leg up.
  • The longer the market stalls around the October 29 high area without a strong breakout above, the higher the odds of a deeper pullback.

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