The miss in the ADP report yesterday gave the market a bit of relief after a series of strong economic data like Jobless Claims, ISM Manufacturing PMI and Job Openings. The ISM services PMI has also printed bang on expectations, and coupled with the other reports, supports the soft-landing narrative. Moreover, the market was also helped by the fall in Treasury yields and Oil prices which might calm the fears of another inflationary wave. Technically, we are also around key levels and the selloff after the more hawkish than expected FOMC dot plot might need at least a correction.
Russell 2000 Technical Analysis – Daily Timeframe
On the daily chart, we can see that the Russell 2000 eventually reached the key support around the 1720 level where it bounced. The buyers are likely to step in here with a defined risk below the support to target a rally into the resistance around the 1820 level. If the price comes back to the 1820 resistance, the sellers will have again a strong zone where to lean on as there’s the confluence with the trendline and the 50% Fibonacci retracement level.
Russell 2000 Technical Analysis – 4 hour Timeframe
On the 4 hour chart, we can see that we have another good spot for the sellers around the 1760 level as we have the confluence with the previous support turned resistance, the 50% Fibonacci retracement level, the red 21 moving average and the minor trendline. This is where the sellers are likely to step in with a defined risk above the trendline to position for another drop into the 1720 support, ultimately targeting a break lower.
Russell 2000 Technical Analysis – 1 hour Timeframe
On the 1 hour chart, we can see the current price action around the support zone. A break above the 1734 level should confirm the bounce and lead to a rally into the trendline around the 1760 level with 1820 coming into play if the price breaks through the minor trendline. On the downside, if the price breaks the low around the 1708 level, we can expect the bearish momentum to increase, and the sellers extend the selloff into the cycle lows.
Upcoming Events
Today we have the Jobless Claims report, which continues to show a solid labour market and given the reaction to the miss in the ADP yesterday, we can expect a rally in case of a miss and a drop in case of a beat. Tomorrow, it will be the time for the NFP report which is the only one the Fed will see before its next rate decision.