Russell 2000 Technical Analysis

Yesterday, the Russell 2000 finished the day
positive as the lack of bearish catalysts continues to support the market. In
fact, the path of least resistance remains to the upside as growth and
employment stay resilient, and the Fed continues to signal three rate cuts this
year even if inflation reaccelerates a bit.

Russell 2000 Technical
Analysis – Daily Timeframe

On the daily chart, we can see that the Russell
2000 rallied back to the cycle high around the 2115 level. We can also notice
that the price continues to diverge with the
MACD, which
is generally a sign of weakening momentum often followed by pullbacks or
reversals. This is where we can expect the sellers to step in with a defined
risk above the cycle high to position for a drop back into the 2020 support. The
buyers, on the other hand, will want to see the price breaking higher to
increase the bullish bets into new highs.

Russell 2000 Technical
Analysis – 4 hour Timeframe

On the 4 hour chart, we can see that the price got
overstretched recently as depicted by the distance from the blue 8 moving average. In such
instances, we can generally see a pullback into the moving average or some
consolidation before the next move. In this case, we got the pullback into the
moving average where the buyers stepped in for a rally back into the cycle
highs.

Russell 2000 Technical Analysis
– 1 hour Timeframe

On the 1 hour chart, we can see that the
latest leg higher is diverging with the MACD right at the cycle high. This
should give the sellers a bit more confidence for a move lower as it could be a
signal at least for a pullback into the trendline. If
the price were to pull back, the buyers will likely lean on the trendline to
position for a break above the cycle high with a better risk to reward setup.
The sellers, on the other hand, will want to see the price breaking lower to
increase the bearish bets into the 2020 support.

Upcoming
Events

Today we get the latest US Jobless Claims figures,
while tomorrow we conclude with the US PCE report and Fed Chair Powell.

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