Russell 2000 Technical Analysis | Forexlive

Last
Friday, the Russell 2000 pulled back from the cycle high as a hot US PPI report
weighed on the market. In fact, the Treasury yields rose, and the rate cuts
expectations got trimmed some more as fears of stickier inflation started to
creeping in. The Fed members though keep on dismissing the latest figures as
something expected and continue to repeat that the disinflationary trend
remains intact. This suggests that the Fed is not even considering rate hikes
and in the worst-case scenario could just delay rate cuts. The market might
continue to like this as long as the economic data remains good. Today the
market will be closed for the Presidents Day and will resume trading tomorrow.

Russell 2000 Technical
Analysis – Daily Timeframe

On the daily chart, we can see that the Russell
2000 broke through the key resistance once
again as the buyers are trying to set a new high. We can see that the price has
been printing higher lows recently, so the buyers are clearly in control but
another rejection from the highs could end up in a double top, which
is something that the sellers will watch very carefully.

Russell 2000 Technical
Analysis – 4 hour Timeframe

On the 4 hour chart, we can see that the market
fell into the close last Friday with the price now right at the key resistance
zone. This is where the buyers are likely to step in with a defined risk below
the zone to position for a rally into a new high. Alternatively, the buyers
will have an even better opportunity, from a risk to reward perspective, around
the trendline.

Russell 2000
Technical Analysis – 1 hour Timeframe

On the 1 hour chart, we can see that the
latest leg higher diverged with
the MACD which
is generally a sign of weakening momentum often followed by pullbacks or
reversals. In this case, it might be another sign of a bigger pullback into the
trendline.

Upcoming
Events

This week is basically empty on the data front with just
the release of the FOMC Meeting Minutes on Wednesday followed by the US Jobless
Claims and the US PMIs on Thursday.