Russell 2000 Technical Analysis | Forexlive
On the daily chart below, we can
see that the market got stuck in a range since the failure of the Silicon
Valley Bank. The Russell 2000 underperformed other indices because it has more
exposure to the regional bank stocks. The price keeps rejecting the support level at 1731 but the sellers
for now seem to have the upper hand.
The moving
averages are clearly crossed to the downside keeping the downtrend intact. The
Fed is not on the market’s side either as they want to keep at it while setting
up some emergency landing facilities to backstop any major crisis.
On the 4
hour chart below, we can see more closely the range created between the 1731
support and the 1800 resistance where we have also the 38.2% Fibonacci
retracement level. This type of trading environment is the
worst as traders can get chopped out within the range if it’s not identified in
time.
The best
strategy is generally to sit out and wait for a clear breakout supported by a
fundamental catalyst. But one can also “play the range” though, buying at
support and selling at resistance.
On the 1 hour chart, we can see
that the sellers tried a breakout last week, but the selling momentum was weak
as depicted by the divergence between the price and the MACD. Once the sellers folded, the
buyers stepped in aggressively pushing the price to almost the top of the whole
divergent move.
The buyers will have now have the
1745 level and the red long period moving average as the support zone to try
another push to the upside, towards the top of the range. The sellers, on the
other hand, will want to see the price breaking below the 1745 level to try
another breakout.