E-Mini: Bulls Want Reversal Higher From Trend Channel Line

 | Jun 27, 2022 09:03AM ET

h2 Market Overview: S&P 500 E-mini Futures

The S&P 500 E-mini reversed higher from trend channel line overshoot and a wedge bottom. The bears failed to create follow-through selling below May low on the weekly chart. Bulls want a reversal higher from a trend channel line overshoot and a wedge bottom, but they will need to create follow-through buying next week to convince traders that a reversal higher may be underway.

h2 S&P500 E-mini futures/h2 h3 The Weekly S&P 500 E-mini chart/h3
This week’s E-mini candlestick was a bull bar closing near the high. It closed the gap from last week.
  • Last week, we said that odds slightly favor sideways to down for the week. The bears want another bear bar closing near the low, while for the bulls a bull reversal bar closing near the high, with a long tail below – even though the E-mini may trade slightly lower first.
  • This week gapped higher at the open and continued to trade higher for the rest of the week.
  • The bulls want a failed breakout below the May low.
  • They see a trend channel line overshoot, and a wedge bottom (Feb 24, May 20 and June 17).
  • Since this week was a bull bar closing near the high, it is a good buy signal bar for next week. It may even gap up on Monday, but small gaps usually close early.
  • The bulls need to create a consecutive bull bar next week to convince traders that a reversal higher may be underway.
  • Bears want a continuation of the measured move down to 3600 or lower around 3450, based on the height of the 12-month trading range starting from May 2021.
  • However, they failed to get follow-through selling following last week’s breakout below May low.
  • They hope that the current pullback will stall around or below the June 2 high, or the bear trend line and reverse lower from a double top bear flag.
  • This week’s candlestick is a weak sell signal bar. Odds are they will be buyers below.
  • We have said that the trend channel line overshoot increases the odds of a 2-legged sideways to up pullback beginning within 1 to 3 weeks. The pullback phase may have begun this week.
  • With this week closing near the high, the odds are next week should trade at least slightly higher.
  • Traders will be monitoring if the bulls get a consecutive bull bar (follow-through buying), something they have failed to do since April.
  • If the bulls get that, the odds of a test of the June 2 high and the 20-week exponential moving average increases.
    • h3 The Daily S&P 500 E-mini chart/h3