The Fed hiked interest rates by 25 bps as expected and kept everything unchanged. This outcome was already baked 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 data since the FOMC meeting has been supporting the soft landing narrative with the US Jobless Claims beating expectations once again and the US PCE and Employment Cost Index coming lower than expected.
Russell 2000 Technical Analysis – Daily Timeframe
On the daily chart, we can see that the Russell 2000 is starting to consolidate just beneath the key 2030 resistance zone. This is where we should see the sellers piling in aggressively with a defined risk above the resistance to target the lows. The buyers will need to break this strong zone with conviction to open the door for a rally towards the 2140 level.
Russell 2000 Technical Analysis – 4 hour Timeframe
On the 4 hour chart, we can see that we have a divergence with the MACD right when the price is nearing the resistance zone. This is a sign of weakening momentum, often followed by pullbacks or reversals. In this case, the price pulled back to the 1965 support and bounced as the buyers piled in to target a breakout of the resistance.
Russell 2000 Technical Analysis – 1 hour Timeframe
On the 1 hour chart, we can see that we are now basically stuck in a range between the 2030 resistance and the 1965 support. The best strategy is generally to sit out and wait for a clear breakout before taking a position. Nonetheless, one can also “play the range” by buying at support and selling at resistance until the breakout.
Upcoming Events
This week there are many top tier economic indicators. On Tuesday, we will have the US ISM Manufacturing PMI and Job Openings. On Wednesday, it will be the time for the US ADP. Moving on to Thursday, the market will focus on the US Jobless Claims and the US ISM Services PMI. Finally, we conclude the week with the US NFP report on Friday.
