Basic Overview
The Russell 2000 index rose strongly from yesterday’s lows after the release of strong US jobless claims figures, as the data eased some concerns about the labor market after last Friday’s weak US nonfarm payrolls report.
Market expectations for a rate cut have eased slightly but remain very high with a 55% chance of a 50bp cut in September and a total of 103bp of cuts by year-end. If the NFP report is negatively impacted by Hurricane Beryl, as the data suggests, we can expect the market to return to the old scenario of resilient growth and positive risk sentiment.
Moreover, Japanese markets should no longer be a problem, given that Japanese officials have made it very clear that they will not proceed with further tightening amid market volatility.
Russell 2000 Technical Analysis – Daily Time Frame
Send 2000 daily
On the daily chart, we can see that the Russell 2000 bounced off the 1994 swing low and extended gains to rise back above the major trend line. This could have been just a trick that could turn into a strong bullish signal.
Buyers should start gathering above the trend line with risks defined below it, while sellers will look for another dip below the trend line to target the 1994 level and break below it.
Russell 2000 Technical Analysis – 4-Hour Time Frame
Russell 2000 4 hours
On the 4-hour chart, we can see that we have strong resistance around the 2100 level where the price has been rejected several times in the past days. A break to the upside would make buyers gain more confidence and increase bullish bets to new highs. On the other hand, sellers are likely to rely on this resistance with risks defined above it to position a downside position back to the 1994 level.
Russell 2000 Technical Analysis – 1 Hour Time Frame
Send 2000 for 1 hour
On the 1-hour chart, we can more clearly see that the price has been moving in a limited range lately as the market waited for good news to gain more confidence. We will see in the coming days if the market is able to break out to the upside and rise to new highs. The red lines mark the average daily range for today.