Russell 2000 Technical Analysis | Forexlive
On the daily chart below, we can
see that the Russell 2000 is still stuck in a range between the 1723 support and the 50% Fibonacci resistance since the collapse of
the Silicon Valley Bank. The Russell 2000 index is more sensitive to regional
bank stocks and that’s why it underperformed the other major stock indices. On
the monetary policy front, the Fed
is leaning to a pause in June, although it keeps a door open
for another hike in case the economic data remains strong.
On the fiscal side, the debt
ceiling talks are still ongoing, and we keep having rallies on positive news
and selloffs on negative ones. For context, the debt ceiling has always been
raised and it’s not the first time that we go through this drama. Although
there’s a higher chance of a US default this time, the market is still
confident in a resolution eventually.
On the 4
hour chart below, we can see that due to the fact that the debt ceiling is
expected to be raised eventually, the Russell 2000 had bigger rallies on
positive news and shallower selloff on negative ones. This should be a classic
“buy the rumour” type of trade where the Russell 2000 maintains the uptrend and
the buyers buy the dips on negative news.
The red
long period moving
average is acting as a dynamic support for the buyers and it’s likely that
we’ll see the price starting to rally here and breaking above the swing
resistance level at 1795. The ultimate target for the buyers should be the 50%
Fibonacci retracement level.
On the 1 hour chart, we can see
that the buyers couldn’t sustain a break above the 1795 resistance as the divergence with the MACD and the negative news on the debt
ceiling talks weighed on the Russell 2000. The selloff stalled
at the 1768 swing support level. The sellers will want to see the price
breaking lower to pile in and extend the fall back towards the 1723 support.
The buyers, on the other hand, should start to come as soon as the price breaks
above the 1782 level to target a break above the 1795 resistance and then the
50% Fibonacci retracement level.