![\"Monthly](\"https:\/\/www.brookstradingcourse.com\/wp-content\/uploads\/2016\/10\/m-1.png\" "\\"\\"")
<\/a><\/p>\nThe monthly S&P500 Emini futures candlestick chart is forming its 3rd consecutive doji bar. While this is a small bull flag, it is a weak buy setup and there are probably sellers above. <\/p>\n
The monthly S&P500 Emini futures candlestick chart had 7 consecutive bull trend bars prior to September. Every time that has happened in the 18 year history of the Emini, the Emini sold off about 100 points within a month or two. Hence, the probability of a big bull breakout from here is small. <\/p>\n
Furthermore, last month’s low created a gap above the 2 year trading range. Since this gap formed after about 100 bars in a bull trend, it is more likely an exhaustion gap than a measuring gap. Therefore, the odds are that the Emini will drop back below the July 2015 high of 2084.50 before going much above the all-time high. Because the bull trend has been so strong, the odds are that the 1st reversal down will attract buyers. As a result, the bulls will likely get their new high.<\/p>\n
In conclusion, the odds favor a new high and a pullback below 2084.50. Yet, traders do not know which will come first. Whichever one does will create a high probability setup for a test of the other.<\/p>\n
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Weekly S&P500 Emini futures candlestick chart:
Both a potential wedge top and an exhaustion gap.<\/h2>\n
The weekly S&P500 Emini futures candlestick chart has an ii pattern. It is deciding between rallying to a new high and selling off to close the gap above the July 2015 high. It will probably do both, yet no one knows which will come first.<\/p>\n The weekly S&P500 Emini futures candlestick chart has had strong momentum up since the July low. Yet, the August pullback created a gap above the 2 year trading range high. When a breakout late in a trend creates a gap, there is a 70% chance that the gap will close, and only a 30% chance that it will lead to a measured move up. Therefore, the Emini is more likely to fall below 2084.50 before reaching the 2400 measured move target.<\/p>\n Because there was a strong bear breakout in early September, the weak rally since then is a bear flag. Yet, once a bear flag grows to 20 bars, the odds of a bear breakout drop to the same as for a bull breakout. That is the current Breakout Mode situation. <\/p>\n As much as this is true, the bulls might get one more new high before the gap closes. If there is a new high and a reversal down, that would be a wedge top since the February low. The odds would then favor about a 10 bar, 2 legged correction on the Emini chart. The target would be the 1st pullback on the daily chart after the strong reversal up. This is the July 6 low of 2059.25. As a result of that test, the monthly chart would have its correction of about 100 points.<\/p>\n <\/p>\n The daily S&P500 Emini futures candlestick chart has been in a triangle for 3 weeks and is therefore in Breakout Mode. <\/p>\n The daily S&P500 Emini futures candlestick chart has a small double top in the August tight trading range. This lead to a brief strong selloff in September, and a month-long weak rally. Hence the bear flag of the last month has an equal probability of bull breakout and a bear breakout. Traders expect that if there is an October selloff, it will probably be brief and then lead to a new all-time high.<\/p>\n October often sells off into the middle of the month and then rallies to the end of the year. That can still happen this year because the monthly chart has a buy climax that will probably correct down about 100 points at any point in October or November. Because the odds are that bulls will buy the pullback and create a rally to a new all-time high, bears should be careful selling too low in the breakout. The odds are there will be more buyers than sellers 100 points down from the high.<\/p>\n <\/p>\n Traders can see the end of the day bar-by-bar price action report by signing up<\/a> for free at BrooksPriceAction.com. I talk about the detailed Emini price action real-time throughout the day in the BrooksPriceAction.com trading room<\/a>. We offer a 2 day free trial<\/a>.<\/p>\n<\/a><\/p>\nDaily S&P500 Emini futures candlestick chart:
Brief October selloff then new all-time high<\/h2>\n<\/a><\/p>\nOctober selloff<\/h3>\n
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