Fundamental Overview
The Russell 2000 bounced strongly from the lows yesterday following good US Jobless Claims figures as the data quelled some of the fears around the labour market after the weak US NFP report last Friday.
The market pricing for rate cuts eased a bit but remains quite elevated with a 55% probability of a 50 bps cut in September and a total of 103 bps of easing by year-end. If the NFP report was indeed negatively impacted by Hurricane Beryl, which is what has been transpiring from the data, then we can expect the market to go back to the old script of resilient growth and positive risk sentiment.
Moreover, the Japanese markets shouldn’t be a problem anymore given that the Japanese officials made it pretty clear that they won’t proceed with more tightening given the volatility in the markets.
Russell 2000 Technical Analysis – Daily Timeframe
On the daily chart, we can see that the Russell 2000 bounced on the swing low level at 1994 and extended the gains to rise back above the major trendline. This might have been just a fakeout which could turn into a strong bullish signal.
The buyers should start to pile in above the trendline with a defined risk below it, while the sellers will look for another drop below the trendline to target the 1994 level and a break below it.
Russell 2000 Technical Analysis – 4 hour Timeframe
On the 4 hour chart, we can see that we have a strong resistance around the 2100 level where the price got rejected from several times in the past days. A breakout to the upside should see the buyers gaining more confidence and increasing the bullish bets into new highs. The sellers, on the other hand, will likely lean on this resistance with a defined risk above it to position for a drop back into the 1994 level.
Russell 2000 Technical Analysis – 1 hour Timeframe
On the 1 hour chart, we can see more clearly the recent rangebound price action as the market waited for good news to gain more confidence. We will see in the next days if the market manages to break to the upside and rally to new highs. The red lines define the average daily range for today.
