The Fed yesterday hiked interest rates by 25 bps as expected and kept the policy
statement unchanged. This outcome was already priced in, and the market was
more interested on possible hints from Fed Chair Powell regarding the next
policy moves. Unfortunately, Powell didn’t offer much as he just repeated their
data dependency and kept all options on the table. The market spiked here and
there but, in the end, returned to the levels prior to the meeting.
Russell 2000 Technical
Analysis – Daily Timeframe
Russell 2000 Daily
On the daily chart, we can see that the since
breaking out of the 1920 resistance, the
Russell 2000 rallied strongly targeting the 2030 resistance zone. The pullbacks
have been really shallow as the buyers leant on the blue 8 moving average to position
for more upside. The price is now near the key resistance area where we should
start to see the real battle with the sellers unfold.
Russell 2000 Technical
Analysis – 4 hour Timeframe
Russell 2000 4 hour
On the 4 hour chart, we can see that the recent
pullback into the previous swing high support saw the buyers piling in with a
defined risk below the level to position for another rally into the resistance
area as they are targeting a breakout. The momentum though looks weak, and the
price is starting to diverge with the
MACD right
when it’s getting closer to the resistance. This is generally a sign of
weakening momentum often followed by pullbacks or reversals.
Russell 2000 Technical
Analysis – 1 hour Timeframe
Russell 2000 1 hour
On the 1 hour chart, we can see that the
price action is basically rangebound as we approach the strong resistance area.
The best strategy here would be to wait for a clear breakout. The buyers will
want to see a break above the 2030 resistance zone to extend the rally into the
next resistance at 2134. The sellers, on the other hand, are likely to lean on
the resistance with a defined risk above the area to target the 1920 support.
Alternatively, if the price breaks below the 1966 level, the sellers should
pile in to target the 1920 support.
Upcoming
Events
Today the market is likely to focus on the US
Jobless Claims report. The data needs to deviate substantially from the
expected numbers to cause notable moves in the market. If the data misses
expectations, we are likely to see the Russell 2000 falling as the market may
get recessionary vibes. On the other hand, if the data beats forecasts, we
should see the Russell 2000 rallying into the resistance where things will get
interesting. Tomorrow, we will see the latest US PCE and ECI reports where the
market is likely to be more interested in the wages data given the tight labour
market.