The Fed yesterday hiked interest rates by 25 bps as expected and kept the policy statement unchanged. This outcome was already priced in, and the market was more interested on possible hints from Fed Chair Powell regarding the next policy moves. Unfortunately, Powell didn’t offer much as he just repeated their data dependency and kept all options on the table. The market spiked here and there but, in the end, returned to the levels prior to the meeting.
Russell 2000 Technical Analysis – Daily Timeframe
On the daily chart, we can see that the since breaking out of the 1920 resistance, the Russell 2000 rallied strongly targeting the 2030 resistance zone. The pullbacks have been really shallow as the buyers leant on the blue 8 moving average to position for more upside. The price is now near the key resistance area where we should start to see the real battle with the sellers unfold.
Russell 2000 Technical Analysis – 4 hour Timeframe
On the 4 hour chart, we can see that the recent pullback into the previous swing high support saw the buyers piling in with a defined risk below the level to position for another rally into the resistance area as they are targeting a breakout. The momentum though looks weak, and the price is starting to diverge with the MACD right when it’s getting closer to the resistance. This is generally a sign of weakening momentum often followed by pullbacks or reversals.
Russell 2000 Technical Analysis – 1 hour Timeframe
On the 1 hour chart, we can see that the price action is basically rangebound as we approach the strong resistance area. The best strategy here would be to wait for a clear breakout. The buyers will want to see a break above the 2030 resistance zone to extend the rally into the next resistance at 2134. The sellers, on the other hand, are likely to lean on the resistance with a defined risk above the area to target the 1920 support. Alternatively, if the price breaks below the 1966 level, the sellers should pile in to target the 1920 support.
Upcoming Events
Today the market is likely to focus on the US Jobless Claims report. The data needs to deviate substantially from the expected numbers to cause notable moves in the market. If the data misses expectations, we are likely to see the Russell 2000 falling as the market may get recessionary vibes. On the other hand, if the data beats forecasts, we should see the Russell 2000 rallying into the resistance where things will get interesting. Tomorrow, we will see the latest US PCE and ECI reports where the market is likely to be more interested in the wages data given the tight labour market.
