Yesterday, the Russell 2000 had a negative day as the US ADP data missed expectations which might have weighed on the sentiment heading into the NFP report tomorrow. There might also be a general profit taking ahead of the NFP data and the FOMC rate decision next week as the market might want some new strong catalyst to make new highs. In the bigger picture, the market generally peaks when the labour market weakens, and the unemployment rate starts to rise steadily, so the bulls should be very careful heading into the 2024.
Russell 2000 Technical Analysis – Daily Timeframe
On the daily chart, we can see that the Russell 2000 yesterday started to fall soon after the open as the sentiment might have deteriorated following the miss in the US ADP data ahead of the NFP tomorrow. The trend for now remains bullish as the price has been printing higher highs and higher lows with the moving averages being crossed to the upside.
The buyers should lean on the trendline where they will also find the confluence with the Fibonacci retracement levels, the key 1820 support zone and the red 21 moving average. A break lower would invalidate the bullish setup and switch the bias from bullish to bearish.
Russell 2000 Technical Analysis – 4 hour Timeframe
On the 4 hour chart, we can see that we have another minor trendline on this timeframe where the buyers could lean onto with the red 21 moving average adding extra confluence. The buyers might want to split their order in half as the price could very well break through the minor trendline and react to the major one. The sellers, on the other hand, are likely to pile in at every break lower with a break below the major trendline confirming the change in trend.
Russell 2000 Technical Analysis – 1 hour Timeframe
On the 1 hour chart, we can see that the latest leg higher diverged with the MACD which is generally a sign of weakening momentum often followed by pullbacks or reversals. In this case, as long as the price stays above the trendlines, we will be in the pullback zone, but if the price breaks the major trendline, a reversal would be confirmed, and the sellers will regain control.
Upcoming Events
Today we get the latest US Jobless Claims figures where the market will want to see how fast the US labour market is weakening. Tomorrow, we conclude the week with the US NFP report which is going to be a big market moving event.
