Russell 2000 Technical Analysis | Forexlive

The risk of two or more
rate hikes from the Fed hasn’t weighed too much on the Russell 2000 as the
index kept on finding strong bids despite the hawkish FOMC stance. A notable
development recently was the miss in the ISM Manufacturing PMI where we saw contraction on all
components. This is something that happens only in recessions, but the market
took it with a pinch of salt given that soft data has been giving false signals
for a long time while the real economy remained resilient.

Russell 2000 Technical
Analysis – Daily Timeframe

On the daily chart, we can see that the Russell
2000 bounced on the 1820 support zone and
rallied back strongly into the 1920 resistance. The buyers once again couldn’t
break above the resistance zone and the price started to fall. The moving averages are also
threatening a crossover now and we can expect another selloff into the 1820
support.

Russell 2000 Technical
Analysis – 4 hour Timeframe

On the 4 hour chart, we can see that the sellers
stepped in again at the 1920 resistance with a defined risk above the zone and
should now be targeting the 1820 support. The moving averages are crossed to
the downside as the bearish momentum prevails. From a risk management perspective,
the buyers would be better off waiting for the price to come back into the 1820
support and pile in there to target another breakout.

Russell 2000 Technical
Analysis – 1 hour Timeframe

On the 1 hour chart, we can see that we
also had a divergence with
the MACD
approaching the 1920 resistance which was a signal that the momentum was
weakening and a pullback or reversal was in the cards. The price is now
printing lower lows and lower highs and there’s no clear entry point for the
sellers other than waiting for a pullback into the previous swing low at 1885,
where they will also find the red 21 moving average, and position for new shorts
into the 1820 support.

Upcoming
Events

Today we have the US Jobless Claims and the ISM
Services PMI on the agenda, while tomorrow we will finally see the latest NFP
report. The market has been reacting positively to good data so we might expect
the same if we get positive readings. On the other hand, misses to the
forecasts may bring back recession fears and lead to some risk off sentiment.