Russell 2000 Technical Analysis | Forexlive

Last week, the Russell 2000 pulled back into key
levels as the stronger than expected inflation data and the quick rise in
Treasury yields weighed on the stock market. There’s been also some
profit-taking as we approach the FOMC rate decision on Wednesday with the risk
of a hawkish surprise. Overall, the market is likely to remain supported as
long as the Fed does not restart to hike rates, or the economy does not falter.

Russell 2000 Technical
Analysis – Daily Timeframe

On the daily chart, we can see that the Russell
2000 fell all the way back to the key support zone
around the 2020 level. This is where we can expect the buyers to step in with a
defined risk below the support to position for a rally into a new cycle high.
The sellers, on the other hand, will want to see the price breaking lower to
invalidate the bullish setup and increase the bearish bets into the next
support around the 1920 level.

Russell 2000 Technical
Analysis – 4 hour Timeframe

On the 4 hour chart, we can see that the price broke
below the lower bound of the rising channel. This breakout increased the
chances of a bigger move to the downside, but the price will first need to
break below the 2020 support to confirm the bearish setup. The sellers should
start to pile in as the price retests the bottom trendline of the
channel.

Russell 2000
Technical Analysis – 1 hour Timeframe

On the 1 hour chart, we can see that around
the bottom trendline of the channel, we can also find a minor downward
trendline with the confluence of the
50% Fibonacci
retracement level and the red 21 moving average. This
is where we can expect the sellers to step in with a defined risk above the
trendline to position for a break below the 2020 support with a better risk to
reward setup. The buyers, on the other hand, will want to see the price
breaking higher to invalidate the bearish setup and increase the bullish bets
into a new cycle high.

Upcoming
Events

This week we have the FOMC rate decision on Wednesday
where the Fed is expected to keep rates unchanged. The market will be on the
lookout for hawkish surprises though following the stronger than expected
inflation data. On Thursday, we conclude with the latest US PMIs and Jobless
Claims figures,