Basic Overview
The Russell 2000 has been on a stunning bull run since the last U.S. CPI report, posting its best five-day run in 24 years. The good data has been the catalyst for a strong shift from large-cap to small-cap stocks, and the momentum may have been exacerbated by hedge funds facing short-term pressure on their small-cap hedges as yields have fallen.
Recently, we have finally started to see a pullback that was not driven by any negative catalyst, so it could be an opportunity to buy on the dip as the fundamentals have reinforced the case for a soft landing.
Russell 2000 Technical Analysis – Daily Time Frame
Send 2000 daily
On the daily chart, we can see that Russell 2000 It rejected the resistance level at 2290 and started to decline. The first support area is located around the 2170 level where we can find the confluence of the previous swing high and the 38.2% Fibonacci retracement level.
Here we can expect buyers to step in with a certain risk below support in order to prepare for a rally to new highs. On the other hand, sellers will want to see the price drop to lower levels to increase bearish bets towards the next support around the major trend line.
Russell 2000 Technical Analysis – 4-Hour Time Frame
Russell 2000 4 hours
On the 4-hour chart, we can see the US CPI on the chart as the catalyst that unleashed the massive rally towards the 2290 level. There is not much to glean from this time frame as buyers are likely to wait around the 2170 level, while sellers will be looking for a lower low to increase bearish bets.
Russell 2000 Technical Analysis – 1 Hour Time Frame
Send 2000 for 1 hour
On the 1-hour chart, we can see that the price is approaching the support area. If the price bounces before reaching the support, we can expect buyers to gather on a break above the recent higher low at 2226. The red lines mark the average daily range for the day.