S&P 500 E-Mini: Double Top Bear Flag

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bears are hoping to get the three^rd consecutive bear bar buying and selling far under March 3 excessive. In the event that they get that, the percentages of a take a look at of the February low will increase. The bulls see this as a 50% pullback and need a 2^nd leg sideways to as much as re-test March 29 excessive.

S&P 500 E-mini futures

This week’s E-mini candlestick was a bear bar closing close to the low with small tails above and under. It closed barely under the March 3 excessive.
Final week, we mentioned that odds barely favor sideways to up after a pullback but when the bears get consecutive bears bars closing close to the low, odds will swing in favor of a take a look at of the February low and probably a breakout under.
Bears need the E-mini to stall round February 2 excessive and reverse decrease from a double prime bear flag. They acquired the consecutive bear bar this week which represents follow-through promoting.
The bears need a sturdy break under the February 24 low which is the neckline of the double prime bear flag and a measured transfer down in the direction of 3600 based mostly on the peak of the 8-month buying and selling vary.
We’ve mentioned if the bears get sturdy consecutive bears bars closing close to their low, odds will swing in favor of a take a look at of the February low and probably a breakout under. This stays true.
Bulls hope that the transfer up from March 14 is the beginning of the reversal to re-test the development excessive adopted by a brand new excessive.
The bulls count on at the very least a small second leg sideways to up, even when there’s a pullback first.
The bulls need subsequent week to be a bull bar, even when the E-mini trades barely decrease first. They see the present transfer as a 50% pullback of the sturdy rally from March 14.
So, which is extra seemingly? A pullback and a continuation greater or a double prime bear flag and a reversal decrease to check the February low?
The E-mini is at present buying and selling across the center of the 8-month buying and selling vary. Lack of readability is the hallmark of a buying and selling vary. Buying and selling ranges are inclined to disappoint each the bulls & bears and have poor follow-through.
There haven’t been 3 consecutive bear bars since October 2020. Will subsequent week be one other bear bar? Or will the bears be disillusioned with a bull bar as an alternative?
Odds are, the prior leg up from March 14 was a bull leg inside a buying and selling vary, not the beginning of a brand new bull development.
Since this week was a bear bar closing close to the low, it’s a cheap promote sign bar for subsequent week. Odds are, the E-mini will commerce at the very least barely decrease.
It could even hole down on the open. Nevertheless, small gaps normally shut early.
If the bears get one other bear bar subsequent week, particularly whether it is large and closes close to the low, the percentages will swing in favor of a take a look at of the February low.
Nevertheless, if subsequent week trades decrease, however reverses to shut close to the excessive, odds of a reversal from a wedge bull flag to re-test the March 29 excessive will increase.

**The Every day S&P 500 E-mini chart**

The E-mini traded decrease testing the March 3 excessive and stalled across the 50-day transferring common for the entire shortened week (market closed on Friday).
Final week, we mentioned if the three^rd leg sideways to down types however then stalls across the March 3 excessive, there could be a wedge bull flag sample. From there, odds are we’ll see patrons return and the second leg sideways to as much as re-test March 29 excessive start.
We additionally mentioned if the bears handle to get sturdy consecutive bear bars buying and selling far under the March 3 excessive as an alternative, the percentages of a take a look at of February low will increase.
The final 4 buying and selling days have been sideways and consolidated across the March 3 excessive. Whereas it did shut barely under the March 3 excessive, the bears might want to create consecutive bear bars closing far under it to persuade merchants {that a} re-test of the February low is underway.
The bears need the E-mini to reverse decrease from a double prime bear flag (February 2 and March 29). They then need a sturdy break under February 24 low and a measured transfer all the way down to round 3600 based mostly on the peak of the 8-month buying and selling vary.
The bulls need the rally from March 14 low to re-test the development excessive, adopted by a breakout to a brand new all-time excessive.
We’ve mentioned that the rally from the March 14 low was in a good bull channel and robust sufficient for merchants to count on at the very least a small 2^nd leg sideways to up. The bulls see the present transfer decrease as a 50% pullback and a wedge bull flag.
There are two issues with the bull’s case: 1) The bears are beginning to get large bear bars closing close to the low and a couple of) The bull bars have weak or no follow-through shopping for.
The bulls want to start out creating sturdy consecutive bull bars right here and forestall the bears from breaking far under the March 3 excessive.
The present pullback from March 29 is in a good bear channel. Nevertheless, it has numerous overlapping bars and a wedge sample. The bears usually are not as sturdy as they could possibly be.
The market has been in a buying and selling vary for 8 months. Lack of readability is the hallmark of a buying and selling vary.
The buying and selling vary is extra prone to proceed than a powerful breakout from both course.
We’ll seemingly see merchants BLSH (Purchase; Low; Promote; Excessive) on the extremes of the buying and selling vary.
Since Thursday was a bear bar closing close to the low, it’s a good promote sign bar for Monday. It could even hole down on Monday. Small gaps normally shut early.
Odds barely favor sideways to down early subsequent week. Merchants can be monitoring whether or not the bulls can create a reversal up from a wedge bull flag, or the bears proceed to create consecutive bear bars buying and selling far under March 3 excessive.
If the bears handle to get sturdy consecutive bear bars buying and selling far under the March 3 excessive as an alternative, the percentages of a take a look at of the February low will increase.

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