Yesterday, the Russell 2000 finished the day positive despite some pressure for most of the day. There was no catalyst for the selling other than some general risk off sentiment due to impending Nvidia earnings. The company crushed expectations and the stock surged in after-hours trading. Although the stock is not part of the index, the general risk sentiment should improve and lead to some upside. Moreover, we got the FOMC Meeting Minutes yesterday but as it’s always the case, they were stale and didn’t contain anything that the market didn’t already know. Today we will see the latest US Jobless Claims figures and the US PMIs which will likely be big market movers.
Russell 2000 Technical Analysis – Daily Timeframe
On the daily chart, we can see that the Russell 2000 pulled back into the red 21 moving average where we found some buyers. This is starting to look like a double top, but notice also that the price has been printing higher lows, which is indicative of a bullish trend. The buyers for now are in control and we can expect another extension to the upside to try again a breakout. The sellers, on the other hand, will need the price to make a new lower low to invalidate the bullish setup and turn the trend around.
Russell 2000 Technical Analysis – 4 hour Timeframe
On the 4 hour chart, we can see that we have a trendline defining the current bullish trend with the buyers stepping in already. We should see a bounce around these levels and another rally into the 2073 high where the buyers will try to break out. The sellers, on the other hand, will want to see the price continuing lower and breaking below the trendline to confirm the double top and target the 1920 support first and after a further break lower, the 1820 level next.
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, we got the pullback into the trendline as expected. Now the buyers have a much better risk to reward setup to position for a rally into the 2073 level and we can expect them to increase the bullish bets if the price were to break above the 2011 level.
