In terms of Russell 2000 technical analysis, the market is trading carefully ahead of the FOMC meeting next week. The bulls had a good run recently ignoring the deterioration in leading indicators like PMIs and focusing more on the lagging ones like employment.
The labour market data keep on beating expectations with little sign of weakness. This, coupled with moderation in inflation, gave the market hopes for a “soft landing” scenario where inflation returns to its target without much damage in the economy and the Fed can ease its monetary policy for a happily ever after ending.
That would be certainly an unexpected and amazing outcome, but the signals from economic data are mixed and the Fed is more likely to keep policy tight as long as the labour market remains tight. Watch out for the next week events because not only we will have the FOMC Policy Decision, but we will also get three major economic reports: the two ISM PMIs and the NFP.
RUSSELL 2000 Technical Analysis
In the daily chart above, we can see that the price is again at the resistance at 1910-1920 zone. The market hasn’t broken that resistance since September 2022, and it will need a good catalyst for the bulls to manage a breakout and a rally to the next resistance at 2030.
If the market fails again and the sentiment turns sour, we may see the bears taking control and possibly targeting the lows at 1630. The next week should be decisive for the next move.
In the 1-hour chart above, we can see how the big miss in Retail Sales data sent the market lower right from the resistance before picking up again with a beat in Jobless Claims data still showing a resilient labour market.
Russell 2000 Eyes Key US Data
Yesterday, although we got another beat in economic data like Q4 GDP and Jobless Claims, the market couldn’t break the resistance. This may be a sign of cautiousness as the next week there are many risk events like FOMC, ISM PMIs and NFP. It’s probably going to be choppy heading into those events.
Zooming in to the 15 minutes chart, we can see the near term price action with the market selling off right at the stock market open and then recovering soon after. The 1903 level should provide some support for the bulls, but the resistance zone at 1910-1920 has been a tough one to crack.
If the 1903 support gets breached, the bears should target the next support level at 1886 with a possible continuation to 1862 if the market turns fearful.
