S&P 500 E-Mini Bulls Form 3 Consecutive Bull Bars – Should You Go Long?

Market Overview: Emini Futures

The Strong Bulls formed 3 consecutive bullish bars closing near their highs, breaking well above the 20-week EMA and the downtrend line on the weekly chart. They want a resumption of the uptrend. The bears hope to get a reversal from a lower main trend reversal or a double top.

S&P 500 Emini Futures

S&P 500 Emini Weekly Chart

• This week’s Emini candle was another consecutive bullish bar that closed near its high.
• Last week we said that the odds still slightly favor the market to trade at least a little higher and traders will see if the bulls can get another follow-up bullish bar, closing above the downtrend line.
• It traded higher this week and the bulls got a follow-up bullish bar that closed well above the downtrend line.
• The bulls see the move lower (since July 27) as a deep retracement of the entire bullish move that began in October 2022.
• They got a reversal of a bullish wedge flag (August 18, October 3, and October 27) and a breakout of the trend channel line.
• They then made a strong rally with consecutive bullish bars breaking well above the 20-week EMA and the downtrend line.
• The current bullish move occurs in a bullish 4-bar microchannel with large bullish bars closing near their highs. That means strong bulls.
• If they get a couple of strong consecutive bullish bars, the chances of the uptrend resuming will increase. The uptrend may be resuming.
• If the market is trading lower, they want an upside reversal from a lower main trend reversal and the 20-week EMA to act as support.
• The bulls will need to create follow-up purchases after this week closes above the downtrend line.
• Previously, the bears lowered the third leg forming the wedge pattern (August 18, October 3 and October 27).
• They wanted a strong break below the uptrend line, but instead the market reversed strongly.
• Bears see the strong rally as a retest of the July 27 high and want a reversal of a lower main trend reversal or double top.
• Since this week’s candle is a bullish bar that closes near its high, it is a buy signal bar for next week.
• The market may rise on Monday. Small gaps usually close early.
• The odds continue to slightly favor the market still being in the sideways up phase.
• Traders will see if the bulls can get another follow-through bullish bar or the market will trade slightly higher but close as a doji or with a bearish body.
• If the market trades slightly lower in the coming weeks, the odds slightly favor the bulls getting at least a small second sideways leg up.

S&P 500 Emini Daily Chart

• The market settled above the downtrend line on Tuesday, followed by sideways to bullish trading through Friday.
• Last week we said that the odds slightly favor the market still being in the sideways up phase. Traders will see if the bulls can create sustained follow-up trades well above the October high and the downtrend line.
• Bulls saw the previous sell-off as a deep retracement of the entire rally that began in October 2022.
• They got a reversal of a bullish wedge flag (August 18, October 3, and October 27) and a breakout of the trend channel line.
• The bullish movement is strong with several large gaps remaining open and in a narrow bullish channel.
• The next targets for the bulls are the July 27 high and the all-time high.
• They expect the current rally to form a peak and for the channel to last for many months.
• If the market is trading lower, the odds slightly favor at least a small second sideways leg up.
• Bears hope the strong rally is simply a retest of the July 27 high.
• They want a strong downward reversal, like the one in August 2022, after a similar strong rally.
• They want a downside reversal from a lower main trend reversal and a micro double top (Nov 15-17).
• For now, buying pressure remains very strong despite the climactic nature of the move.
• Until the bears can create strong bear bars with continued sustained selling, the odds continue to favor the market still being in the sideways up phase.
• If there is a larger pullback, the odds slightly favor at least a small second sideways leg up after the pullback.