Yesterday, the Fed left interest rates unchanged as expected with basically no change to the statement. The market was fearing some hawkish stuff, but we didn’t get any. In fact, the Dot Plot showed still three rate cuts for this year and the economic projections were all upgraded with growth and inflation higher and the unemployment rate lower. Moreover, during the press conference, Fed Chair Powell didn’t sound hawkish, on the contrary, he was fairly neutral. This gave the Russell 2000 the green light for a rally as the risk sentiment turned very bullish.
Russell 2000 Technical Analysis – Daily Timeframe
On the daily chart, we can see that the Russell 2000 bounced on the key support zone around the 2020 level and rallied strongly following the Fed decision. The buyers piled in aggressively and will likely target a new cycle high now. There’s not much to do here for the sellers as they will need some key breakouts on the lower timeframes and a change in sentiment to turn things around.
Russell 2000 Technical Analysis – 4 hour Timeframe
On the 4 hour chart, we can see that the price bounced on the key support zone where we had also the confluence with the 50% Fibonacci retracement level and broke above the counter-trendline. The buyers piled in on the breakout and extended the rally into the swing level at 2080.
Russell 2000 Technical Analysis – 1 hour Timeframe
On the 1 hour chart, we can see that from a risk management perspective, the buyers will have a much better risk to reward setup around the upward trendline where there’s also the red 21 moving average for confluence. The sellers, on the other hand, will want to see the price breaking below the trendline to position for a break below the key support. Given the strong positive risk sentiment though, we might not get a pullback and the buyers will likely increase the bullish bets on a break above the 2080 level.
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Today we will get some key economic data as we will see the latest US Jobless Claims figures and the US PMIs.
