Last week, the Russell 2000 continued to consolidate after failing to break out of the two year long range. Overall, the market is still seeing a soft landing path ahead, in fact, despite the slightly higher than expected US CPI figures, the US Jobless Claims improved further and the US PPI data missed forecasts. Moreover, the Fedspeak has been generally neutral with no strong pushback against the market's rate cuts expectations. Today, the market will be closed for MLK Day, but we will have some important events throughout the week.
Russell 2000 Technical Analysis – Daily Timeframe
On the daily chart, we can see that the Russell 2000 broke below the trendline that was defining the uptrend since last November and started to consolidate around the 1970 level. There’s not much to do here as the price is trading right between two key zones, so the sellers will want to short from the 2020 resistance while the buyers will want to go long around the 1920 support.
Russell 2000 Technical Analysis – 4 hour Timeframe
On the 4 hour chart, we can see that the price recently pulled back into the 38.2% Fibonacci retracement level where we had also the red 21 moving average for confluence. This is where the sellers stepped in to position for a drop into the 1920 support. The buyers should wait for the price to come into the 1920 support to position for a rally back to the highs with a better risk to reward setup.
Russell 2000 Technical Analysis – 1 hour Timeframe
On the 1 hour chart, we can notice that the price is starting to diverge with the MACD as it approaches the key 1920 support zone. This is generally a sign of weakening momentum often followed by pullbacks or reversals. In this case, it might be another bullish confluence for the buyers which should give them more conviction to pile in around the support and target the 2020 resistance.
Upcoming Events
Tomorrow, all eyes will be on Fed's Waller as the market will be eager to see if he decides to pushback against the aggressive rate cuts expectations. On Wednesday, we will get the US Retail Sales report while on Thursday we will see the latest US Jobless Claims figures. Finally, on Friday, we conclude the week with the University of Michigan Consumer Sentiment survey.
