Russell 2000 Technical Analysis

Yesterday,
the Russell 2000 finished the day positive as a big drop in the price index in
the ISM Services PMI turned the sentiment around and quelled some
inflation fears. In fact, the market stayed under pressure since the hot ISM Manufacturing PMI on Monday as the increase in the price index
renewed fears of a reacceleration in inflation. For now, the market might take
a sigh of relief, but all eyes then will turn on the US CPI report next
Wednesday.

Russell 2000 Technical
Analysis – Daily Timeframe

On the daily chart, we can see that the Russell
2000 has been diverging with the
MACD, which
is generally a sign of weakening momentum often followed by pullbacks or
reversals. We indeed got a pullback recently from the 2138 high with the price
yesterday bouncing near the key trendline. We can
expect the buyers to step in around these levels with a defined risk below the
low to position for a rally back into the cycle high. The sellers, on the other
hand, will want to see the price breaking below the 2020 support zone to
increase the bearish bets into the 1920 support.

Russell 2000 Technical
Analysis – 4 hour Timeframe

On the 4 hour chart, we can see that the price
bounced on the 61.8% Fibonacci retracement level
near the trendline as the buyers piled in following the PMI report. If we get
another move to the downside, the buyers will pile in again as they will have a
strong support defined by the trendline and the 2020 zone.

Russell 2000 Technical
Analysis – 1 hour Timeframe

On the 1 hour chart, we can see more
closely the recent price action with the price yesterday getting rejected by
the red 21 moving average into
the close. If the price breaks above the 2081 level today, we can expect more
buyers to pile in and increase the bullish momentum into the cycle high.

Upcoming
Events

Today we will see the latest US Jobless Claims
figures, while tomorrow we conclude the week with the US NFP report.

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