Russell 2000 Technical Analysis

Last week, the Russell 2000 finished on a positive
note as the lack of bearish catalysts kept the market supported. Today, the
futures market opened higher following the good PCE report last
Friday when the market was closed for holidays. Therefore, we can expect to see
a positive gap at the open. Overall, the path of least resistance remains to
the upside with the main two risks for the bullish sentiment being a
reacceleration in inflation leading to a hawkish Fed or a hard landing.

Russell 2000 Technical
Analysis – Daily Timeframe

On the daily chart, we can see that the Russell
2000 last week 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. We can expect the sellers to step in around these levels to fade the
positive gap at the open and position for a drop back into the 2020 support. The
buyers, on the other hand, will likely take advantage of a pullback to position
for new highs.

Russell 2000 Technical
Analysis – 4 hour Timeframe

On the 4 hour chart, we can see that from a risk
management perspective, the buyers will have a much better risk to reward setup
around the trendline,
although we will need to see some key breaks on the lower timeframe to start
looking at those levels. The sellers, on the other hand, will want to see the
price breaking below the trendline to increase the bearish bets into the 1920
support.

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. 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 minor trendline. If the price were to pull back, the buyers
will likely lean on the trendline to position for new highs with a better risk
to reward setup.

Upcoming
Events

This week we get the release of many key economic data.
We begin today with the US ISM Manufacturing PMI. Tomorrow, we have the US Job
Openings. On Wednesday, we get the US ADP and the US ISM Services PMI data. On
Thursday, we will see the latest US Jobless Claims figures, while on Friday we
conclude with the US NFP report.

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