Russell 2000 Technical Analysis | Forexlive


Recent economic data has caused the Russell 2000 and the market to break out of the Christmas range, and bullish sentiment appears strong.

Beating NFP numbers and underperforming AHE (Average Hourly Earnings) have left the market anticipating a golden cycle scenario: a strong labor market without wage inflation. Meanwhile, a big miss in the ISM Services PMI has led the market to expect the Fed to quickly end its hike with an earlier-than-expected tapering cycle on the horizon.

Yesterday, the US CPI came out as expected, and There was another shock that caught the attention of the market Applications for unemployment benefits data showing a stable and strong labor market. It should be really bearish because it keeps the Fed at 5% or higher and then stays there longer.

Thus, they can maintain strict conditions for too long, which leads to excessive tightening of financial conditions. But currently, the market is looking at more of a Goldilocks scenario.and we have to wait until he starts worrying about the risks mentioned above.

In the daily chart above, we can see how the price fared after breaking out of the Christmas range. A strong bull run has begun resistance area in 1920.

A break above this zone could open the door for a run to resistance in 2030. A failure in the 1920 area and bearish fundamentals will bring the price back to support at the 1650 level.

In the hourly chart above, we can see recent economic data and risk events that have fueled bullish sentiment. The break started with NFP and PMI data. The market then went on the defensive ahead of Fed Chair Powell’s speech, but as he offered nothing bearish, the market resumed its rally.

Finally, better-than-expected CPI data and pace of UI claims gave the market another reason to maintain its bullish momentum. The resistance 1920 seems to be the natural target of the current upward trend.

By zooming in on the 15-minute chart, we can see the short-term interest levels. If the price stays above the 1873 level, the market should maintain its bullish bias and aimed to resist 1920. If the price breaks below 1843, sellers should regain control and set the range break level to 1800. Between the green and red lines, the price is no man’s land and should not offer any trading opportunities..


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