Last Friday, the Russell 2000 didn’t move much as the lack of bullish catalysts and some profit taking in the major indices led to a rangebound price action. On the economic data side, we got another slate of strong data last Thursday with the US Jobless Claims and US PMIs beating expectations. The Fed members continue to repeat that they want to see a couple more of inflation reports before deciding on rate cuts, but they keep on reiterating that cuts are coming this year. Overall, the path of least resistance remains to the upside.
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 recently where we found some buyers. At face value, the chart looks like a double top, but notice also that the price has been printing higher lows, which is indicative of a bullish bias. 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 continuing to bid up the price into the 2073 high. In case we get a pullback from these levels, we can expect the buyers to step in again around the trendline. 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 moving averages crossed to the upside recently as the price continued to print higher highs and higher lows. The buyers should pile in around these levels with a defined risk below the most recent swing low at 2004. In case the price breaks though, the buyers will have another opportunity at the trendline with an even better risk to reward setup.
Upcoming Events
This week we have some important economic data on the agenda. We begin tomorrow with the release of the US Consumer Confidence report. On Thursday, we will see the US PCE and the latest US Jobless Claims figures. Finally, on Friday, we conclude the week with the US ISM Manufacturing PMI.
