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Last week, the Russell 2000 managed to hold into
the gains from the prior week given another slate of goldilocks economic data
with a pickup in the PMIs, a much
better than expected GDP report
and the Core PCE
indicating that the inflation rate over the last 3 and 6 months data fell below
the Fed’s 2% target. This week contains many risk events so we might see the
market trading a bit on the defensive side, but barring any negative surprises,
we will likely continue to see new higher highs.

Russell 2000 Technical
Analysis – Daily Timeframe

Russell 2000 Daily

On the daily chart, we can see that the Russell
2000 bounced on the key support zone
around the 1920 level and rallied into the key resistance zone around the 2020
level where it got rejected. The price started to range as buyers and sellers
began their battle with the sellers targeting a drop back into the support
while the buyers are aiming for a breakout and new highs.

Russell 2000 Technical
Analysis – 4 hour Timeframe

Russell 2000 4 hour

On the 4 hour chart, we can see more clearly that the
price got rejected from the resistance where we had also the 61.8% Fibonacci retracement level
for confluence and went
into a consolidation ever since. Technically, the bias is skewed to the upside
given the moving
averages
crossover, but the market will need some strong catalyst to break
above the key resistance as it’s been holding the index in a range for almost
two years.

Russell 2000
Technical Analysis – 1 hour Timeframe

Russell 2000 1 hour

On the 1 hour chart, we can see more
closely the recent consolidation just beneath the resistance zone which gives
us two possible trading scenarios:

  • A break to the upside is likely to lead to
    a rally into new highs.
  • A break to the downside should trigger a
    drop into the support zone.

Upcoming
Events

This week is going to be a really busy one with the FOMC
rate decision and lots of economic data on the agenda. We begin tomorrow with
the US Job Openings and the US Consumer Confidence reports. On Wednesday we
will see the US Employment Cost Index and the ADP data before the FOMC rate
decision later in the day. On Thursday, we get the latest US Jobless Claims
figures and the ISM Manufacturing PMI. Finally, on Friday, we conclude the week
with the US NFP report.

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