Last Friday, the Russell 2000 finished the day positive as the US PCE report came mostly in line with expectations. The market has already priced out almost all the rate cuts that were expected at the beginning of the year and it’s now expecting just one in September or December. This means that we will need more worrying data to start pricing in a rate hike and put more downward pressure on the market. For now, the dip-buyers are again in control as we continue to erase the losses from the beginning of the month.
Russell 2000 Technical Analysis – Daily Timeframe
On the daily chart, we can see that the Russell 2000 is now testing again the key resistance zone around the 2020 level where we can also find the red 21 moving average for confluence. This is where we can expect the sellers to step in with a defined risk above the zone to position for a break below the 1920 support. The buyers, on the other hand, will want to see the price breaking higher to invalidate the bearish setup and increase the bullish bets into a new cycle high.
Russell 2000 Technical Analysis – 4 hour Timeframe
On the 4 hour chart, we can see that the price got rejected from the downward trendline where we had also the confluence of the 50% Fibonacci retracement level but eventually turned around to retest it. The price broke out of the trendline, but it will need to rise above the 2020 resistance zone to invalidate the bearish setup. If the price falls back below the trendline, it will leave behind a fakeout, which is generally a reversal pattern.
Russell 2000 Technical Analysis – 1 hour Timeframe
On the 1 hour chart, we can see more closely the recent price action with the price breaking out of the trendline and running into the Fibonacci level. This is where the sellers will continue to pile in with a defined risk above the resistance to position for a drop into the 1920 support. The buyers, on the other hand, will want to see the price breaking higher to invalidate the bearish setup and position for a rally into a new cycle high.
Upcoming Events
Tomorrow, we have the US Q1 Employment Cost Index and the Consumer Confidence report. On Wednesday, we get the US ADP, the ISM Manufacturing PMI, the Job Openings and the FOMC rate decision. On Thursday, we will see the latest US Jobless Claims figures. On Friday, we conclude the week with the US NFP and ISM Services PMI.
