Yesterday, the Russell 2000 ended the day negative as the relief rally reached some key resistance levels. The first part of the week has been pretty empty on the data front, and we hadn’t any Fedspeak due to the blackout period. This has led to a relief rally which was exacerbated by weaker US PMIs as the market interpreted them as good news for inflation, although there were some worrying commentary on the labour market side. Beginning today, we will have many top tier economic data ahead as the new month comes with new reports.
Russell 2000 Technical Analysis – Daily Timeframe
On the daily chart, we can see that the Russell 2000 eventually pulled back into 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 zone to position for a break below the 1920 support. The buyers, on the other hand, will want to see the price breaking higher to invalidate the bearish setup and increase the bullish bets into a new cycle high.
Russell 2000 Technical Analysis – 4 hour Timeframe
On the 4 hour chart, we can see that the price got rejected from the downward trendline where we can also find the confluence of the 50% Fibonacci retracement. This should give the sellers even more conviction to pile in around these level with a defined risk above the trendline to position for a drop into new lows. The buyers, on the other hand, will need to break above the trendline to invalidate the bearish setup and turn the trend around.
Russell 2000 Technical Analysis – 1 hour Timeframe
On the 1 hour chart, we can see more closely the recent price action with the price breaking out of the descending wedge and running into the trendline. The sellers will also need to watch out for a spike above the trendline today as we get some market moving US data. If the price were to eventually leave behind a fakeout, that would be an even stronger signal for a drop into new lows.
Upcoming Events
Today we get the US Q1 GDP and the latest US Jobless Claims figures. Tomorrow, we conclude the week with the US PCE report.
