Last week, the market remained under pressure as
the more hawkish than expected FOMC dot plot was
still fresh in everyone’s mind. The economic data continues to support the
soft-landing narrative with Jobless Claims showing
a solid labour market and Core PCE trending
downwards. The last day of the week, we got a small bounce across the board as
the market took a breather after the heavy selloff after the FOMC meeting. We
will see if it was just a pullback or the start of a new rally.
Russell 2000
Technical Analysis – Daily Timeframe
Russell 2000 Daily
On the daily chart, we can see that the Russell
2000 bounced around the 1760 level and pulled back into the key support turned resistance. This
might turn in a classic “break and retest” pattern with another selloff taking
the price into the 1720 support zone. We
can see that we have some strong confluence here as
there’s the 38.2% Fibonacci retracement level,
the red 21 moving average and the trendline. The
bears remain in control for now.
Russell 2000 Technical
Analysis – 4 hour Timeframe
Russell 2000 4 hour
On the 4 hour chart, we can see that we have a divergence with the
MACD, which
is generally a sign of weakening momentum often followed by pullbacks or
reversals. In this case, we should get just a pullback as long as the price
doesn’t break above the trendline, in which case we would have a reversal and
the buyers would regain control.
Russell 2000 Technical
Analysis – 1 hour Timeframe
Russell 2000 1 hour
On the 1 hour chart, we can see the rally
on the last day of the previous week which got rejected at the minor trendline
where we had also the confluence with the 38.2% Fibonacci retracement level.
The sellers should pile in around here with a defined risk above the trendline to
target the 1720 support. The buyers, on the other hand, will want to see the
price breaking above the trendline to position for a rally into the next major
trendline.
Upcoming
Events
This week we have many key economic releases that will
culminate in the NFP report on Friday. Today, we will see the latest ISM
Manufacturing PMI. Tomorrow, we will have the Job Openings data which led to a
strong rally the last time as the big miss was interpreted as a good thing due
to less labour market tightness and less hawkish Fed. On Wednesday, it will be
the time for the ADP report and the ISM Services PMI. On Thursday, we will see
the Jobless Claims data, which continues to show a solid labour market. Finally
on Friday, it will be the time for the NFP report which is the only one the Fed
will see before its next rate decision.