Russell 2000 Technical Analysis

Yesterday, the Fed left interest rates unchanged as
expected with basically no change to the statement. The market was fearing some
hawkish stuff, but we didn’t get any. In fact, the Dot Plot showed still three
rate cuts for this year and the economic projections were all upgraded with
growth and inflation higher and the unemployment rate lower. Moreover, during
the press conference, Fed Chair Powell didn’t
sound hawkish, on the contrary, he was fairly neutral. This gave the Russell
2000 the green light for a rally as the risk sentiment turned very bullish.

Russell 2000 Technical
Analysis – Daily Timeframe

On the daily chart, we can see that the Russell
2000 bounced on the key support zone
around the 2020 level and rallied strongly following the Fed decision. The
buyers piled in aggressively and will likely target a new cycle high now.
There’s not much to do here for the sellers as they will need some key
breakouts on the lower timeframes and a change in sentiment to turn things
around.

Russell 2000 Technical
Analysis – 4 hour Timeframe

On the 4 hour chart, we can see that the price bounced
on the key support zone where we had also the confluence with the
50% Fibonacci retracement level
and broke above the counter-trendline. The
buyers piled in on the breakout and extended the rally into the swing level at
2080.

Russell 2000 Technical
Analysis – 1 hour Timeframe

On the 1 hour chart, we can see that from
a risk management perspective, the buyers will have a much better risk to
reward setup around the upward trendline where there’s also the red 21 moving average for
confluence. The sellers, on the other hand, will want to see the price breaking
below the trendline to position for a break below the key support. Given the
strong positive risk sentiment though, we might not get a pullback and the
buyers will likely increase the bullish bets on a break above the 2080 level.

Upcoming
Events

Today we will get some key economic data as we will
see the latest US Jobless Claims figures and the US PMIs.

This article was written by FL Contributors at www.forexlive.com.