Fundamental
Overview
The Russell 2000 continues
to maintain a positive outlook while even outperforming the major indices given
less exposure to overvalued tech stocks.
The market has been making
new highs ever since the last US inflation data as it marked the top in the
repricing of rate cuts expectations and inflation fears.
The Fed yesterday kept interest rates unchanged as
widely expected and Fed Chair Powell maintained a neutral stance as they are
waiting for more inflation progress and more clarity on Trump’s policies before
cutting again.
The market is now back in
expecting two rate cuts by the end of the year with the first one seen in June.
The risks ahead lie around inflation as the market will want to see more
progress.
There are also risks to
growth, especially if Trump’s tariffs lead to trade wars. Right now, it seems
like he just threatens countries with tariffs to get better deals.
Russell 2000
Technical Analysis – Daily Timeframe
On the daily chart, we can
see that the Russell 2000 is breaking above the key 2300 resistance. This is where the buyers will
likely pile in with a defined risk below the 2300 level to position for a rally
into the all-time highs. The sellers, on the other hand, will want to see the
price falling back below the level to target the 2200 level next.
Russell 2000 Technical
Analysis – 4 hour Timeframe
On the 4 hour chart, we can
see more clearly the recent rangebound price action around the 2300 level. The positive
Fed Chair Powell’s comments yesterday seem to have given the buyers more
conviction for more upside with the 2337 level as the next target. The sellers,
on the other hand, will likely look for a drop below the 2300 level before
piling in for new lows.
Russell 2000 Technical
Analysis – 1 hour Timeframe
On the 1 hour chart, there’s
not much else we can add here as the buyers will continue to push into the 2337
level, while the sellers will look for a drop back below the 2300 level to
target new lows. The red lines define the average daily range for today.
Upcoming
Catalysts
Today we get the US Q4 GDP report and the latest US Jobless
Claims figures. Tomorrow, we conclude the week with the US PCE and the US
Employment Cost Index.
This article was written by Giuseppe Dellamotta at www.forexlive.com. Source