Yesterday, the Russell 2000 remained under pressure as the market continued to reprice the aggressive rate cuts expectations following Fed’s Waller comments. Moreover, the economic data surprised once again to the upside with the US Retail Sales beating expectations across the board and Industrial Production edging up. Overall, the soft-landing narrative is still intact but in the short term the market is readjusting to tighter monetary conditions.
Russell 2000 Technical Analysis – Daily Timeframe
On the daily chart, we can see that the Russell 2000 is now at a key support zone where we can also find the 38.2% Fibonacci retracement level for confluence. This is where the buyers are likely to step in with a defined risk below the support to position for a rally into the highs and target a breakout. The sellers, on the other hand, will want to see the price breaking lower to increase the bearish bets into the next support around the 1820 level.
Russell 2000 Technical Analysis – 4 hour Timeframe
On the 4 hour chart, we can see that in case of a bounce from the support zone, we will find a strong resistance at the downward trendline where we can also find the confluence with the red 21 moving average and the 50% Fibonacci retracement level. This is where the sellers will likely step in with a defined risk above the trendline to position for a break below the key support zone. The buyers, on the other hand, will want to see the price breaking higher to invalidate the bearish setup and increase the bullish bets into the highs.
Russell 2000 Technical Analysis – 1 hour Timeframe
On the 1 hour chart, we can notice that we have a divergence with the MACD which is generally a sign of weakening momentum often followed by pullbacks or reversals. In this case, it should be another layer of confluence for the buyers. If the price fails to rally and breaks the support zone, we should see more downside coming in the next few weeks.
Upcoming Events
Today, we will see the latest US Jobless Claims figures, while tomorrow we conclude the week with the University of Michigan Consumer Sentiment survey.
