On the daily chart below for the Russell 2000, we can see that the price broke out of the trendline last Friday and the bearish momentum may increase in the following days.
The 50% Fibonacci retracement level acted as a strong resistance and coupled with the trendline as support the price action formed an ascending triangle pattern that has now been broken. Generally, when the price breaks out the momentum increases, so we may see the price falling all the way back to the previous swing low support at 1731.
Russell 2000 Technical Analysis
On the 4 hour chart below, we can see more clearly the triangle pattern and the breakout. The price broke out last Friday as US PMIs beat expectations across the board. This may be good news for the buyers, but the market seems to be worried of a persistently hawkish Fed as the details about inflation in the report were not encouraging.
On the 1 hour chart, we can see that the price has been ranging between the Fibonacci retracement level and the 1780 support. The sellers may want to see the price to break below the support to confirm the bearish bias as this breakout of the trendline may turn into a fakeout.
The buyers, on the other hand, are likely to lean on this bottom of the range to target a rally towards the Fibonacci retracement level. The next key economic reports will be released at the end of the week, so the technicals should lead in the meantime.
