Last week the Fed kept interest rates unchanged as expected while striking a hawkish tone via the Dot Plot. In fact, the Fed not only sees another rate hike by the end of the year, but also much less rate cuts by the end of 2024. Fed Chair Powell has also admitted that the soft-landing scenario is not his base case at the moment and stronger than expected economic data may require additional tightening. For now, the economic data remains strong with Jobless Claims crushing expectations last week, which is not what the Fed wants to see.
Russell 2000 Technical Analysis – Daily Timeframe
On the daily chart, we can see that the Russell 2000 eventually broke out of the key support zone following the FOMC meeting and it’s now eyeing the 1720 support. At the moment, the price is a bit overstretched as depicted by the distance from the blue 8 moving average. In such instances, we can generally see a pullback or some consolidation before another impulse.
Russell 2000 Technical Analysis – 4 hour Timeframe
On the 4 hour chart, we can see that we might have a classic “break and retest” pattern around the broken support turned resistance where there’s also the confluence with the trendline, the red 21 moving average and the daily blue 8 moving average. That’s where we can expect the sellers to pile in with a defined risk above the trendline to position for a fall into the 1720 support.
Russell 2000 Technical Analysis – 1 hour Timeframe
On the 1 hour chart, we can see more closely the bearish setup with the Fibonacci retracement levels for further confluence. A break above the trendline will invalidate the bearish setup and the buyers will likely take the price into the next major trendline around the 1860 level.
Upcoming Events
This week is pretty bare on the data front with just a couple of notable economic releases. Tomorrow, we will get the latest US Consumer Confidence report while on Thursday we will see again the US Jobless Claims data. On Friday, we conclude the week with the US PCE data.