Emini 4th consecutive bull bar – bull leg in trading range?

Market Overview: S&P 500 Emini Futures

S&P 500 Emini futures continues the strong rally up, with 4^th consecutive bull bar, and likely to test the May 4 high and bear trend line. The move up is strong enough for traders to expect at least a second leg sideways to up after a pullback. The bears want a reversal lower from a wedge bear flag (June 28, July 29 and Aug 13), but because of the strong leg up, the bears will need at least a micro double top or a strong reversal bar before they would be willing to sell aggressively.

S&P500 Emini futures

The Weekly S&P 500 Emini chart

This week’s Emini candlestick was a bull bar closing near the high with a long tail below.
Last week, we said that odds slightly favor at least a small second leg sideways to up after a small pullback.
This week traded higher towards the May 4 high and the major bear trend line. This is the 4^th consecutive bull bar now, the first time in 2022.
The bulls got a reversal higher from a trend channel line overshoot, and a wedge bottom (Feb 24, May 20 and June 17). They want a second leg sideways to up after a pullback.
This is the first series of consecutive bull bars (follow-through buying) since March. There is a 5-bar bull micro channel, and the move up from June 17 low is in a tight channel. That means persistent buying.
The next targets for the bulls are the May 4 high and the major bear trend line.
The bulls will need to close far above the bear trend line to increase the odds of a re-test of the all-time high.
The consecutive bull bars closing near their highs are increasing the odds that the bear trend has ended, and the Emini may be turning into a trading range.
The bears want the Emini to stall around the May 4 high, or the major bear trend line. They want a reversal lower from a lower high followed by a re-test of the June low.
They see the current rally as a deep pullback in a broad bear channel. The bears see a wedge bear flag (June 28, July 29 and Aug 13), but the move up is in a tight bull channel.
Because of the strong move up, the bears will need at least a micro double top or a strong reversal bar before they would be willing to sell aggressively.
Since this week was a strong bull bar, it is a weak sell signal bar for next week. It is a good buy signal bar for next week.
Next week may gap up at the open, however, small gaps usually close early.
The May 4 high and the major bear trend line is close enough that it may act as a magnet. The Emini may need to test it first before we see some profit taking (pullback).
The move up is strong enough for traders to expect at least a small second leg sideways to up move after a pullback.

The Daily S&P 500 Emini chart

SP500 Emini Daily Chart Double Top Bear Flag Tight Channel Up

The Emini pulled back slightly earlier in the week but gapped up to close above June 2 high on Wednesday. Thursday was a bear reversal bar, but Friday reversed to close near May 4 high.
Last week, we said that the move up is strong enough for traders to expect at least a small second leg sideways to up after a pullback. The move up since July 14 is climactic. We may start to see some pullback within the next 1-3 weeks.
So far, the bulls continue to have good buying pressure, while the bear bars are becoming smaller with poor follow-through since July 14.
The bulls got a reversal higher from a trend channel line overshoot and a wedge bottom (Feb 24, May 20 and June 17).
They want a test of the May 4 lower high, followed by a strong break of the major bear trend line.
The bulls then want a continuation higher from a higher low major trend reversal after a pullback.
Friday was a bull bar closing near the high. The Emini may gap up on Monday. Small gaps usually close early.
If the gap remains open but gaps down after a few days, it may then form an island top following a wedge pattern at resistance (bear trend line). However, an island top is a minor reversal pattern.
The bears want a reversal lower from around the May 4 high or around the bear trend line. They then want to re-test the June low, followed by a breakout and measured move down.
There is a wedge pattern (July 22, Aug 3 and Aug 12) since the rally on July 14. However, the move up is in a tight bull channel.
That means strong bulls. The bears will need at least a micro double top or a strong reversal bar before they would be willing to sell aggressively.
We have said that the move up is climactic. We may start to see some pullback within the next couple of weeks. This remains true.
However, the move up since July 14 is in a tight bull channel. It increases the odds of at least a small second leg sideways to up after a pullback.
For now, odds slightly favor a test of the May 4 high and the bear trend line.

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