Russell 2000 Technical Analysis | Forexlive
On the daily chart below, we can
see that sellers eventually managed to take control and push the market lower.
The big selloff was extended by the events concerning the failure of the Silicon
Valley Bank, which collapsed in just two days. This
development spread fears of contagion in the banking system and the market
switched to risk aversion going into the weekend.
During the weekend the Treasury
and the Fed came up with a solution to protect depositors’ money and created a
new emergency
lending facility that gave the banks the chance to convert their
long term securities at the original value instead of being marked to market. This
news gave the market a boost as the futures market reopened and rallied
overnight.
On the 4
hour chart below, we can see that the consolidation just below the breakout of
the 1920 level was followed by a fakeout, as depicted by the orange circle, and
then the start of the selloff.
The
market may now pullback to the 38.2 or 50% Fibonacci
retracement level ahead of the CPI report tomorrow. The risk
mood is still tentative and given the recent events the market has priced
out the
chance of a 50 bps hike and leans more on the 25 bps move.
On the 1 hour chart, we can see
that the sellers are still in control although the recent good news pushed the
price up during the Asian trading session. We will see what the American
session will give us, but as of now it looks like the buyers will have a hard
time fighting against the sellers.
The CPI report tomorrow is what should give the ultimate
direction though, a miss and we should see the buyers step in, while a beat
would give the sellers complete control and push the market to new lower lows.