On the daily chart below for Russell 2000, we can see that the price has breached the trend line last Friday and the bearish momentum may increase in the following days.
The 50% Fibonacci retracement level was a strong resistance and paired with the trend line as support the price action formed an ascending triangle pattern which has now been broken. In general, when the price breaks, the momentum picks up, so we might see the price drop all the way to the previous support on the swing low at 1731.
On the 4-hour chart below, we can see more clearly the triangle and breakout pattern. The price broke last Friday as US PMIs beat expectations across the board. This could be good news for the buyers, but the market seems wary of the Fed’s continued optimism as details about inflation in the report were not encouraging.
On the hourly chart, we can see that the price was ranging between the Fibonacci retracement level and the support of 1780. Sellers might want to see the price break below the support level to confirm the bearish bias as this break of the trend line might turn into a false breakout.
On the other hand, buyers on this bottom of the range are likely to target a rally towards the Fibonacci retracement level. The next major economic reports will be released at the end of the week, so technical indicators should lead in the meantime.