The soft-landing vibes are still present in the market even if we started to see some pullbacks here and there. In fact, following the miss in the US CPI report, the economic data last week was still good with US Retail Sales beating expectations on the Control Group data and the US Jobless Claims falling back near record lows giving another confirmation of the strength of the labour market. The recent bearishness may just be some profit taking or defensive positioning ahead of the FOMC rate decision this Wednesday.

Russell 2000 Technical Analysis – Daily Timeframe

Russell 2000 Technical Analysis
Russell 2000 Daily

On the daily chart, we can see that since breaking out of the key 1920 resistance now turned support, the Russell 2000 rallied all the way up to almost reach the 2030 resistance. A clear breakout of this major range between the 1640 support and 2030 resistance would open the door for a rally to all-time highs. It won’t be an easy task for the buyers though as strong sellers are likely waiting at the 2030 resistance to position for a big fall into the 1640 support.

Russell 2000 Technical Analysis – 4 hour Timeframe

Russell 2000 Technical Analysis
Russell 2000 4 hour

On the 4 hour chart, we can see that the bullish momentum started to wane as the Russell 2000 approached the key 2030 resistance. In fact, we can see that the last leg higher was diverging with the MACD which is generally a sign of weakening momentum often followed by pullbacks or reversals. In this case, the price has broken below the trendline, and the moving averages, crossed to the downside, which raises the chances of a retracement back into the 1920 support.

Russell 2000 Technical Analysis – 1 hour Timeframe

Russell 2000 Technical Analysis
Russell 2000 1 hour

On the 1 hour chart, we can see that we have a good support level at 1965, and this is where the buyers should pile in with a defined risk below the level to position for another rally into the 2030 resistance and hopefully a breakout. The sellers, on the other hand, will want to see the price breaking lower to pile in even more aggressively and extend the fall into the 1920 support.

Upcoming Events

This week is packed with market-moving events. Kicking off today, all eyes will be on the US PMIs. If the data beats expectations, we should see a rally, but if it falls short, we could experience a selloff. Moving ahead to Wednesday, the Fed is expected to raise interest rates by 25 bps to a range of 5.25-5.50%. This decision is already priced in, so it’s unlikely that we’ll see sustained moves out of it.

On Thursday, the focus will shift to the US Jobless Claims report. A positive outcome is likely to bolster the market's sentiment, while disappointing figures could lead to a bearish outcome. Finally, to conclude the week, we will see the latest US PCE and ECI reports. Investors and traders are hoping for softer numbers, which would provide some more confirmation of the soft-landing scenario, and that could be seen as a positive sign for the market.

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