Emini Update: Strong Breakout, but Limited Upside

Focus: STRATEGIES

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

Once a channel evolves into a trading range, both the bulls and bears have setups for swing trades. The bulls and bears are balanced, and each has logical reasons to take swing trades, asserts Al Brooks in his weekly Trader commentary.

Monthly S&P500 Emini futures candlestick chart:
Strong rally, but parabolic wedge top likely

chart 1

The monthly S&P500 Emini futures candlestick chart currently has 4 consecutive bull trend bars. However, the rally is also a parabolic wedge buy climax.

The monthly S&P500 Emini futures candlestick chart is in a parabolic wedge buy climax. Yet, the momentum up is strong enough to reach the next major resistance of the 2500 Big Round Number.

April was a High 1 buy signal bar. In addition, it followed a 4-month buy climax. Furthermore, it was at the resistance of a measured move up from the 2014-2015 trading range. A rally from a High 1 after a buy climax and at resistance usually lasts 1-3 months and then leads to a pullback for several months. Since July is the 3rd month of the rally, the odds are that the Emini will begin to pull back for a few months in July or August.

June is a sell signal bar because it closed below its midpoint. While the bears are running out of time in July, they still can trigger the sell this month by trading below the June low. If the Emini trades down from above June's high to below June's low, July would be an outside down month.

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