On the daily chart below, we can see that the market got stuck in a range since the failure of the Silicon Valley Bank. The Russell 2000 underperformed other indices because it has more exposure to the regional bank stocks. The price keeps rejecting the support level at 1731 but the sellers for now seem to have the upper hand.
The moving averages are clearly crossed to the downside keeping the downtrend intact. The Fed is not on the market’s side either as they want to keep at it while setting up some emergency landing facilities to backstop any major crisis.
On the 4 hour chart below, we can see more closely the range created between the 1731 support and the 1800 resistance where we have also the 38.2% Fibonacci retracement level. This type of trading environment is the worst as traders can get chopped out within the range if it’s not identified in time.
The best strategy is generally to sit out and wait for a clear breakout supported by a fundamental catalyst. But one can also “play the range” though, buying at support and selling at resistance.
On the 1 hour chart, we can see that the sellers tried a breakout last week, but the selling momentum was weak as depicted by the divergence between the price and the MACD. Once the sellers folded, the buyers stepped in aggressively pushing the price to almost the top of the whole divergent move.
The buyers will have now have the 1745 level and the red long period moving average as the support zone to try another push to the upside, towards the top of the range. The sellers, on the other hand, will want to see the price breaking below the 1745 level to try another breakout.
