Despite threats of two or more rate hikes this year, the Russell 2000 came back to like as the regional banking crisis subsided and strong US economic data is giving the market soft landing vibes. The market has been focusing more on the resilience of the economy rather than the risk of more rate hikes, so we should expect more higher highs as long as the data remains strong.
Russell 2000 Technical Analysis – Daily Timeframe
On the daily chart, we can see that the Russell 2000 bounced back strongly on the previous resistance turned support at 1820 where we had also the 50% Fibonacci retracement level. The rally accelerated as the US Consumer Confidence report came in much better than expected and led the market to believe in a soft-landing scenario. The price is now testing again the 1920 resistance zone and a break higher will be key for the buyers as it will likely cause a bullish wave all the way up to the 2030 level.
Russell 2000 Technical Analysis – 4 hour Timeframe
On the 4 hour chart, we can see the big spike up caused by the consumer confidence release that led to a break above the downward trendline and a bullish moving averages crossover. That move opened the door for more bullish momentum and eventually the price reached the 1920 resistance zone. Here’s where we should see the sellers stepping in with a defined risk above the resistance and target the 1820 support again. The buyers, on the other hand, will want to see the price breaking higher to pile in and extend the rally towards the 2030 level.
Russell 2000 Technical Analysis – 1 hour Timeframe
On the 1 hour chart, we can see that the latest move higher was diverging with the MACD. This is generally a sign of weakening momentum often followed by pullbacks or reversals. In this case, it may be just a pullback and the most likely support stands at the 1890 level where we can find a previous swing low point and the 38.2% Fibonacci retracement level. This is where we should see the buyers piling in with a defined risk below the zone and target a breakout of the 1920 resistance. The sellers, on the other hand, should pile in even more if the price breaks below the 1890 level and target the 1820 support.
Upcoming Events
This week has lots of economic data releases beginning with the US ISM Manufacturing PMI today, the US Jobless Claims and ISM Services PMI on Thursday and finally the main event of the week: the US NFP report.