S&P500 Emini Futures Candlestick Chart Has Small Doji Bar

03/23/2017 3:45 pm EST

Focus: STRATEGIES

Al Brooks, MD

Professional Trader, Author, Lecturer, Brooks Price Action, LLC and Brooks Trading Course

The odds of a strong rally from here over the next couple of months are small. More likely, the monthly chart will pull back for a month or two, according to Al Brooks. He has traded full-time for 30 years and is the author of the 100 hour Brooks Trading Course videos, several books on price action and numerous articles.

The monthly S&P500 Emini futures candlestick chart had a big bull trend bar last month. This month’s doji is therefore bad follow-through buying. In addition, the monthly chart is at resistance created by the measured move projection from the two-year Final Flag of 2014 – 2015. Furthermore, it is at the 2400 Big Round number.

It is seasonally bullish but buy climax at resistance. With one week left to the month, the chart could be very different once March closes. Furthermore, the final two weeks of March are usually bullish. In addition, March and April are the strongest consecutive two months of the year. Finally, the Emini is in a strong bull trend. Hence, the bulls could create a big bull trend bar by the end of the month.

Yet, the resistance is strong. In addition, the rally is climactic, especially on the weekly chart. Therefore, the odds of a strong rally from here over the next couple of months are small. More likely, the monthly chart will pull back for a month or two.

It could be more likely than a reversal. Since the monthly chart is in a strong bull trend, the bulls will probably buy the first reversal down. The monthly chart could pull back for one to three months and still be in a strong bull trend. Because the bars on the monthly chart contain a lot of points, a two-month pullback could be 150 points.

This is therefore enough to create a bear trend on the daily chart. Yet, it would still only be a bull flag on the monthly chart. Hence, the downside is not great for the next several months. The bears will probably need at least a micro double top before they can create a reversal on the monthly chart.

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