Russell 2000 Technical Analysis - Key support in sight

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Russell 2000 Technical Analysis - Key support in sight

Last week, we got another set of good economic data
for the US with signs of further disinflation in the core inflation measures.
The soft-landing narrative should be in full swing with resilient labour
market, lower inflation, and lower inflation expectations. Nonetheless, the
Russell 2000 price action remains rangebound, and at this point it might even
be because we are getting near to the FOMC rate decision. Looking forward, the
uncertainty is very high as we either get a soft or hard landing, but the weakness
in other economies like the Eurozone skews the picture to the worse scenario.

Russell 2000 Technical
Analysis - Daily Timeframe

On the daily chart, we can see that the Russell
2000 is consolidating near the key support zone
around the 1820 level. The moving averages are
crossed to the downside and the latest selloff into the support seems to be
pointing to more downside ahead. The sellers will want to see the price
breaking through the support zone to pile in even more aggressively and extend
the selloff into the 1720 level.

Russell 2000 Technical
Analysis - 4 hour Timeframe

On the 4 hour chart, we can see more closely the
support zone near the 1820 level and even on this timeframe the moving averages
point to the downside. Nonetheless, this is a key support, and the buyers are
likely to step in with a defined risk below the level to target a rally into
the 1920 resistance, and ultimately a breakout.

Russell 2000 Technical
Analysis - 1 hour Timeframe

On the 1 hour chart, we can see that we
have a divergence with
the MACD right
near the support zone. This is generally a sign of weakening momentum often
followed by pullbacks or reversals. In this case, the buyers have another
signal that the price might indeed rally from here, but it needs to break above
the most recent swing high at 1866 to confirm that.

Upcoming
Events

This week has just a couple of important economic
releases with the FOMC rate decision on Wednesday being the highlight. The Fed
is expected to keep rates unchanged, and the market will focus more on the Dot
Plot and Fed Chair Powell's press conference, although he's likely to repeat
that they remain data dependent. Moving on to Thursday, we will see another US
Jobless Claims report, while on Friday we conclude the week with the US PMIs
data.

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

Source: Russell 2000 Technical Analysis - Key support in sight

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