Russell 2000 Technical Analysis | Forexlive

The
Russell 2000 yesterday fell hard into the close with no clear catalyst. It might
have been just profit taking as the market was anyway getting more and more
overstretched. The only notable economic release was the US Consumer Confidence report
where the data beat across the board. We are now close to the Christmas
holidays and liquidity is likely to get thinner which increases the risk of
bigger swings. Today the market will focus on the US
Jobless Claims figures as the labour market continues to be a key spot to watch
for the soft-landing narrative.

Russell 2000 Technical
Analysis – Daily Timeframe

On the daily chart, we can see that the Russell
2000 probed a bit above the key resistance zone
around the 2020 level but got smacked back down soon after. The sellers piled
in with a defined risk above the resistance to target a pullback into the 1920
support zone. That’s also where we can expect the buyers to step in again as
they will also find the red 21 moving average for confluence.

Russell 2000 Technical
Analysis – 4 hour Timeframe

On the 4 hour chart, we can see that we have some
more confluence around the 1920 support as we can find the trendline, the
61.8% Fibonacci retracement level
and the red 21 moving average. That’s where the buyers are likely to pile in
and target the break above the 2020 resistance with a better risk to reward
setup. 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
1820 support.

Russell 2000 Technical
Analysis – 1 hour Timeframe

On the 1 hour chart, we can see more
closely the current price action and we can notice that the latest leg higher diverged with
the MACD. This
is generally a sign of weakening momentum often followed by pullbacks or
reversals. In this case, if the price breaks below the recent swing low at
1975, we would get a confirmation of a reversal and the Russell 2000 is likely
to extend the drop into the 1920 support zone.