Last week, the Russell 2000 managed to hold into the gains from the prior week given another slate of goldilocks economic data with a pickup in the PMIs, a much better than expected GDP report and the Core PCE indicating that the inflation rate over the last 3 and 6 months data fell below the Fed’s 2% target. This week contains many risk events so we might see the market trading a bit on the defensive side, but barring any negative surprises, we will likely continue to see new higher highs.
Russell 2000 Technical Analysis – Daily Timeframe
On the daily chart, we can see that the Russell 2000 bounced on the key support zone around the 1920 level and rallied into the key resistance zone around the 2020 level where it got rejected. The price started to range as buyers and sellers began their battle with the sellers targeting a drop back into the support while the buyers are aiming for a breakout and new highs.
Russell 2000 Technical Analysis – 4 hour Timeframe
On the 4 hour chart, we can see more clearly that the price got rejected from the resistance where we had also the 61.8% Fibonacci retracement level for confluence and went into a consolidation ever since. Technically, the bias is skewed to the upside given the moving averages crossover, but the market will need some strong catalyst to break above the key resistance as it’s been holding the index in a range for almost two years.
Russell 2000 Technical Analysis – 1 hour Timeframe
On the 1 hour chart, we can see more closely the recent consolidation just beneath the resistance zone which gives us two possible trading scenarios:
- A break to the upside is likely to lead to a rally into new highs.
- A break to the downside should trigger a drop into the support zone.
Upcoming Events
This week is going to be a really busy one with the FOMC rate decision and lots of economic data on the agenda. We begin tomorrow with the US Job Openings and the US Consumer Confidence reports. On Wednesday we will see the US Employment Cost Index and the ADP data before the FOMC rate decision later in the day. On Thursday, we get the latest US Jobless Claims figures and the ISM Manufacturing PMI. Finally, on Friday, we conclude the week with the US NFP report.
