Russell 2000 Technical Analysis | Forexlive

The recent release of the NFP data,
despite revealing concerning factors such as a higher unemployment rate and
lower average weekly hours, hasn’t had a significant impact on the Russell 2000.
The labour market has remained resilient, albeit slightly looser, which might
eventually result in lower inflation without causing severe harm to the
economy.

Furthermore, the underperformance of the ISM Services PMI hasn’t
affected the market either. In fact, the sub-index indicating lower prices paid
has sparked further speculation that core inflation could decrease without
causing substantial damage.

Regarding the significant miss in Jobless Claims, it was
taken with caution due to seasonal adjustments, and the Continuing Claims data
showed more improvement. Overall, the market chose to focus on the positive
aspects of the data rather than dwelling on the negative ones.

Russell 2000 Technical
Analysis – Daily Timeframe

On the daily chart, we can see that after breaking
out of the 3 month long range, the Russell 2000 rallied strongly towards the
1920 resistance zone as
momentum buyers piled in aggressively. The move though was so violent that the
price got overstretched fast as depicted by the distance from the blue 8 moving average and
eventually we got a pullback. We may have one last spike up to the resistance
zone or even a break higher, but that will be decided by the fundamental events
this week.

Russell 2000 Technical
Analysis – 4 hour Timeframe

On the 4 hour chart, we can see that the Russell
2000 pulled back to the trendline and the
38.2% Fibonacci retracement level.
It’s starting to look like the Russell 2000 bullish momentum is running out of
gas, so the next days will be crucial for the buyers. The crossover of the
moving averages is also a signal of weakening upside momentum and if we break
below the Fibonacci level, we are likely to see a fall into the 1820 support.

Russell 2000 Technical
Analysis – 1 hour Timeframe

On the 1 hour chart, we can see that the
buyers have two main choices here:

• Leaning on the 38.2% Fibonacci retracement
  level with a defined risk below it to target the 1920 resistance zone and an
  eventual breakout.
• Waiting for a break above the downward
  trendline to pile in and extend the rally into the 1920 resistance zone
  targeting a breakout.

The sellers, on the other hand, may want
to wait for a break below the 38.2% Fibonacci retracement level to jump onboard
and target the 1820 support first and a break lower afterwards.

This week holds numerous significant events for the Russell
2000. It all kicks off with the eagerly anticipated US CPI report scheduled for
tomorrow. This report is expected to solidify the market’s expectations for the
upcoming FOMC rate decision, which is scheduled for the following day.
Additionally, later in the week, we have another Jobless Claims report and the
release of the University of Michigan consumer sentiment survey. The previous
release of the survey had a considerable impact on the market due to a
substantial surge in long-term inflation expectations.