Russell 2000 Technical Analysis

Last
Friday, the Russell 2000 ended the day positive following the US NFP report.
In fact, the data beat expectations across the board showing once again that
the labour market remains resilient without too much inflationary pressure as
wage growth continues to ease. The focus will now switch towards the US CPI
data on Wednesday as a hot report could change the Fed’s strategy in the near
term and delay the rate cuts further.

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 into the key trendline recently
where the price bounced off of last Friday following the US NFP release. We can
expect the buyers to step in around these levels with a defined risk below the
low to position for a rally into a new cycle high. The sellers, on the other
hand, will want to see the price breaking below the trendline and 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 we also have
the 61.8% Fibonacci retracement level
near the trendline for extra confluence that
should give the buyers some more conviction to look for a bigger bounce from
these levels.

Russell 2000 Technical
Analysis – 1 hour Timeframe

On the 1 hour chart, we can see more
closely the recent price action with the bounce on the trendline last Friday.
If the price were to break above the counter-trendline, we can expect the
buyers to increase the bullish bets into a new cycle high. The sellers, on the
other hand, will likely lean on the counter-trendline with a defined risk above
it to position for a break below the major trendline with a better risk to
reward setup.

Upcoming
Events

This week is going to be a bit more tranquil on the data
front with the US CPI being the main highlight. On Wednesday, we have the US
CPI report which will likely decide if the Fed is going to delay rate cuts
further. On Thursday, we get the US PPI and the latest US Jobless Claims
figures. Finally, on Friday we conclude the week with the University of
Michigan Consumer Sentiment survey.

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