On the daily chart below, we can see that after bouncing from the 1723 support, the market started to rally again towards the resistance at the 50% Fibonacci retracement level. The market has been stuck in this range since the Silicon Valley Bank collapse in mid/March.

There’s clearly uncertainty in the market around the economy and the interest rates path. The recent economic data has been better than expected and Fed officials acknowledged that if they don’t see weakness in the data, they will lean towards another hike at the June meeting. In fact, after another beat in Jobless Claims yesterday, the market started to price a 30% chance of another hike, which is up from just 2% a few weeks ago.

Russell 2000 technical analysis

On the 4 hour chart below, we can see that the price has run into a minor resistance defined by the swing high at the 1796 level. There’s not much to glean from this chart as the price action is messy in a rangebound market and there are almost no clear support and resistance levels. Nevertheless, we can sense that there’s some short-term optimism around the debt ceiling saga as we can see from the big spike on Wednesday when Biden said that he’s confident on an agreement. For now, we may have a “buy the rumour” type of trade and the price may rally all the way up to the 50% Fibonacci retracement level.

On the 1 hour chart, we can see that the price is struggling a bit at the swing high resistance, but it’s likely that we’ll see a break. The market is likely to extend the rally towards the 1820 level on a breakout. If we get a pullback though, the trendline is the first line of support, followed next by the swing low at 1768. The sellers will want to see the price breaking below the trendline to jump onboard and target the 1768 level, with a further breakout opening the door for a revisit of the 1721 support.

We can also notice that the price is diverging with the MACD right at the resistance. This is generally a sign of weakening momentum and it’s often followed by pullbacks or reversals. Today, the market will focus on Fed Chair Powell and, although he’s expected to just reiterate what he said at the FOMC press conference, more hawkish or dovish comments should trigger big reactions.