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Monthly Emini Bulls Need Follow-through Buying

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Market Overview: S&P 500 Emini Futures

The monthly Emini bulls need follow-through buying following the strong reversal from the April 9 low. They hope the selloff (Apr 7) has alleviated the overbought conditions. The bears want the market to form a lower high and the bear trend line to act as resistance.

S&P500 Emini futures

The Monthly Emini chart

Emini Monthly - Deep Pullback or Major Higher Low & Reversal, Monthly Emini Bulls Need Follow-through Buying
  • The April monthly Emini candlestick was a bear doji closing in its upper half with a long tail below and closing around the 20-month EMA.
  • Last month, we said traders would see if April’s candlestick could close as a strong bear bar near its low or with a long tail below instead.
  • The market traded significantly lower early in the month followed by sideways to up, erasing most of the move.
  • The bears got a strong selloff in April, but the large reversal and long tail below the candlestick indicate they are not as strong as they hoped.
  • They hope to get a retest of the April 7 low, even if it only forms a higher low.
  • If the market trades higher, they want it to form a lower high. They want the bear trend line to act as resistance.
  • They want May’s candlestick to close with a long tail above or with a bear body closing below the 20-month EMA.
  • The bulls see the market forming a major higher low. They hope the selloff (Apr 7) has alleviated the overbought conditions.
  • They want the market to continue in a broad bull channel followed by a breakout above the all-time high.
  • The bulls need to create a strong bull entry bar in May to increase the odds of a resumption of the trend.
  • The market formed a big move down in April, followed by a big move up.
  • Big Down, Big Up creates big confusion and usually leads to a trading range.
  • For now, the market could still trade slightly higher.
  • Traders will see if the bulls can create a strong bull entry bar in May. If they do, that can swing the odds in favor of a resumption of the broad bull channel.
  • Or will May trade slightly higher but close with a long tail above or with a bear body instead?

The Weekly S&P 500 Emini chart

Emini Weekly - Retest 20-Week EMA, Bulls Want AIL
  • This week’s Emini candlestick was a bull bar closing near its high with a long tail below.
  • Last week, we said traders would see if the bulls can create a follow-through bull bar testing near the 20-week EMA, or if the market would trade slightly higher but close with a long tail above or a bear body instead.
  • The bulls got a follow-through bull bar testing near the 20-week EMA.
  • 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 conditions. They want a resumption of the trend.
  • They want a reversal from a higher low major trend reversal (Apr 21).
  • If there is a pullback, they want it to be minor, forming another higher low (vs Apr 21).
  • They hope that the market has flipped into Always In Long.
  • They must create more follow-through buying trading above the 20-week EMA and the March 25 high to increase the odds of a trend resumption.
  • The bears got a large 2-legged selloff testing the 200-week EMA in a tight bear channel.
  • They hoped to get a retest of the prior leg’s extreme low (April 7), but the move lacked follow-through selling, forming a higher low (Apr 21).
  • They see the current move as a deep pullback and a buy vacuum test of the March 25 high.
  • They want it to stall around the March 25 high, forming a large double top bear flag.
  • They want the 20-week EMA or the March 25 high to act as resistance.
  • They hope to get another leg down to form the wedge pattern after the pullback (the first two legs being the Mar 13 and Apr 4 lows).
  • 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 could still trade at least a little higher towards the March 25 high area.
  • Since this week’s candlestick was a bull bar closing near its high, it is a buy signal bar for next week.
  • The market can gap up next week. Small gaps usually close early.
  • Traders will see if the bulls can create a follow-through bull bar closing above the 20-week EMA.
  • Or will the market trade slightly higher but close with a long tail above or with a bear body instead?

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