Yesterday, the Russell 2000 retreated a bit from the highs as the market is waiting for the key catalysts in the next few days and weeks. Nothing has changed in the bigger picture as the Fed is still considering rate cuts conditional on the disinflationary trend being intact. The data has been good but what will matter the most is the next CPI report as that will tell us if the progress on inflation has indeed stalled, or worse, reversed. Before that we will get many important reports including the NFP, but as long as they remain benign the market will likely keep on rising.
Russell 2000 Technical Analysis – Daily Timeframe
On the daily chart, we can see that the Russell 2000 managed to reach the highs ones again as the buyers continue to target a break of the cycle high at 2073. We can notice that the bias is indeed bullish as the price has been printing higher lows into the cycle high. The sellers will need the price to make a new lower low to turn the trend around and start targeting the 1920 support.
Russell 2000 Technical Analysis – 4 hour Timeframe
On the 4 hour chart, we can see that the price has been trading inside a rising channel. From a risk management perspective, the buyers will have a much better risk to reward setup around the lower bound of the channel. The sellers, on the other hand, will want to see the price breaking lower to invalidate the bullish setup and position for a drop into the 1920 support.
Russell 2000 Technical Analysis – 1 hour Timeframe
On the 1 hour chart, we can see more closely the recent price action with the recent pullback into the red 21 moving average. This is where the buyers are likely to step in with a defined risk below the moving average to position for a break of the cycle high. If the price were to continue lower though, the buyers will need to wait for the price to reach the bottom trendline for another opportunity.
Upcoming Events
Today we will see the US PCE and the latest US Jobless Claims figures, while tomorrow we conclude the week with the US ISM Manufacturing PMI.
