Last week, the Russell 2000 surged to new highs following the surprisingly dovish FOMC decision where the Fed increased the rate cuts expected in 2024 to three and Fed Chair Powell delivered some dovish comments. In the last part of the week, we got a slate of soft-landing data as the US Jobless Claims and Retail Sales beat expectations, while the US PMIs missed on the manufacturing side and beat on the services one.
Russell 2000 Technical Analysis – Daily Timeframe
On the daily chart, we can see that the Russell 2000 reached the key resistance zone around the 2020 level. This is where we can expect the sellers to step in with a defined risk above the resistance to position for a drop back into the bottom of the range at 1645. The buyers, on the other hand, may want to wait for a pullback into the broken resistance now turned support around the 1920 level before increasing the long positions.
Russell 2000 Technical Analysis – 4 hour Timeframe
On the 4 hour chart, we can see that we have some strong confluence around the 1920 support as we can find the trendline, the 61.8% Fibonacci retracement level and the red 21 moving average. That’s where the buyers may want to lean onto to have a better risk to reward trade. Alternatively, they may want to split their position in half as the price might break below the first trendline and bounce on the second one.
Russell 2000 Technical Analysis – 1 hour Timeframe
On the 1 hour chart, we can see more closely the current price action with the Russell 2000 consolidating right below the key resistance zone. To recap, the sellers should step in around this resistance to position for a drop all the way back to the 1645 support and increase the bearish bets at every break lower. The buyers, on the other hand, could already pile in at a break above the 2020 resistance, but from a risk management perspective, they will have better risk to reward setups around the trendlines.
Upcoming Events
This week is a bit empty on the data front as we head into the Christmas holidays. On Wednesday, we have the US Consumer Confidence report. On Thursday, we get the latest US Jobless Claims data, while on Friday we conclude the week with the US PCE report.
