S&P 500 E-Mini: Breakout Pullback, Tight Bear Channel
Al Brooks | Oct 10, 2022 09:00AM ET
The E-mini S&P 500 futures traded higher but gave back most of the gains by Friday. Bears see this simply as an E-mini breakout pullback and want another breakout attempt below the June low. Because of the strong selloff, the bulls will need a strong reversal bar or at least a micro double bottom before they would be willing to buy aggressively.
h2 The Weekly S&P 500 E-mini chart/h2- The E-mini gapped up and closed as a bull bar on Monday. Tuesday gapped up again and traded sideways until Thursday below the 20-day exponential moving average. Friday gapped down creating a small island reversal.
- Previously, we said that while the selloff was strong enough for traders to expect at least slightly lower prices, traders should be prepared for some sideways to up pullback lasting days in between, which can begin at any moment.
- The bulls see the strong selloff simply as a sell vacuum testing June low within a trading range.
- They want a reversal higher from a double bottom with the June low and a wedge bull flag (Aug 23, Sept 6 and Sept 30).
- The bulls will need to create consecutive bull bars closing near their highs soon to prevent a breakout and follow-through selling below the June low.
- The problem with the bull’s case is that the selloff from August 16 was very strong. Sideways to up pullbacks may only lead to a lower high.
- Bulls hope to get a reversal higher from a micro double bottom with Sept 30 low next week.
- We said that if the E-mini trades higher, the bears want a reversal lower from a double top bear flag with Sept 21 high, or around the bear trend line or the 20-day exponential moving average. This week reversed lower from the 20-day exponential moving average.
- The bears want a retest of the Sept low, followed by a breakout and a measured move down to 3450 or slightly lower around the 3400 big round number which is also 2020 high.
- Bears want at least another leg down forming the wedge pattern with the first two legs being September 6 and September 30.
- The September low is close enough and likely to be retested again.
- Since Friday was a bear bar with a small tail below, it is a sell signal bar for Monday.
- If the bears get a strong breakout below the September low with follow-through selling early next week, the odds of them reaching the targets below increase.
- For now, the odds slightly favor sideways to down.
Get The News You Want
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.