Russell 2000 Technical Analysis | Forexlive

Last Friday, the Russell 2000 ended the day
negative following the US NFP report.
There was something for everyone. In fact, for the buyers, the payrolls number
beat expectations while the average hourly earnings missed. For the sellers,
the unemployment rate jumped to 3.9% and the household survey showed a third
consecutive month of job losses. In this case, the technicals should help in
determining the next move for the market as we approach some key levels.

Russell 2000 Technical
Analysis – Daily Timeframe

On the daily chart, we can see that the Russell
2000 managed to break above the cycle high recently but failed to extend the
rally as the price pulled back following the NFP report. We can expect the
buyers to step in around the previous cycle high with a defined risk below it
to position for a rally into new highs. The sellers, on the other hand, will
want to see the price falling further to pile in and target the 2020 support zone.

Russell 2000 Technical
Analysis – 4 hour Timeframe

On the 4 hour chart, we can see that the price has
been trading inside a rising channel. From a risk management perspective, the
buyers will have a much better risk to reward setup around the lower bound of
the channel where they will also find the 61.8% Fibonacci retracement level
for confluence. The
sellers, on the other hand, will want to see the price breaking below the
bottom trendline to
increase the bearish bets into the 1920 support.

Russell 2000 Technical
Analysis – 1 hour Timeframe

On the 1 hour chart, we can see that the
latest leg higher diverged with
the MACD. This
is generally a sign of weakening momentum often followed by pullbacks or
reversals. We can see that we have a strong support at the previous cycle high
where we can find the confluence of the black trendline and the 61.8% Fibonacci
retracement level. This is where the buyers will look to buy the dip and
position for new highs. The sellers, on the other hand, will want to see the
price breaking lower to invalidate the bullish setup and position for a drop
into the lower bound of the channel around the 2020 support zone.

Upcoming
Events

Tomorrow we have the main event of the week, that is
the US CPI report. On Thursday we get the US PPI, the US Retail Sales and the
US Jobless Claims figures. On Friday, we conclude the week with the University
of Michigan Consumer Sentiment survey.