Fundamental Overview
The price action in the Russell 2000 has been mostly rangebound in the past couple of weeks although the sentiment continues to favour more upside. The “growth scare” after the ISM Manufacturing PMI and the NFP report looks to be behind us thanks to the US Jobless Claims last week.
This week we got some more positive news on the inflation front as the US PPI surprised to the downside and the US CPI yesterday showed some more easing. That should be good news as the Fed will likely be even more dovish from now on and the chances of three rate cuts by year-end solidify.
Russell 2000 Technical Analysis – Daily Timeframe
On the daily chart, we can see that the Russell 2000 is trading above the major trendline which should give the buyers some more confidence on further gains ahead as the sentiment remains positive. The sellers, on the other hand, will want to see the price falling back below the trendline to start looking for selling opportunities.
Russell 2000 Technical Analysis – 4 hour Timeframe
On the 4 hour chart, we can see that we have a strong resistance around the 2110 level where the price got rejected from several times. Yesterday, the price probed above the resistance following the benign US CPI report but eventually gave back all the gains and fell below the resistance zone.
We can see that the price has been printing higher lows nonetheless, which signals that the bullish structure remains intact. The price action formed an ascending triangle. The price can break on either side of the pattern but what follows next is generally a more sustained move in the direction of the breakout.
Russell 2000 Technical Analysis – 1 hour Timeframe
On the 1 hour chart, we can see more clearly the recent price action. The buyers will likely lean on the minor trendline to position for a break above the resistance with a better risk to reward setup and increase the bullish bets on an eventual breakout.
The sellers, on the other hand, will keep on stepping in around the resistance and look for a break below the minor trendline to increase the bearish bets into the 1993 level. The red lines define the average daily range for today.
Upcoming Catalysts
Today we get the US Retail Sales and Jobless Claims figures. Tomorrow, we conclude the week with the University of Michigan Consumer Sentiment survey.