Yesterday, the Russell 2000 staged a strong rally, erasing all losses from the hot US CPI numbers. It appears the market can see through some higher-than-expected inflation numbers as long as growth remains stable and the Fed does not begin a new tightening process.
Therefore, it might be better to focus more on growth-related data rather than inflation numbers unless there is a serious reacceleration in inflation that forces the Fed to change course and raise rates again.
Russell 2000 Technical Analysis – Daily Timeframe
Russell 2000 daily
On the daily chart, we can see that the Russell 2000 broke through key resistance on Monday, but was knocked back down on Tuesday after the hot US CPI report. The market managed to rise again yesterday and is now testing resistance.
It looks like there will be a fierce battle between buyers and sellers here, with the former targeting a breakout and the latter targeting a sell-off into the support.
Russell 2000 technical analysis – 4-hour time frame
Russell 2000 4 hours
On the 4-hour chart, we can see that the price action is quite choppy and erratic between the resistance and the support. There is not much to do here other than wait for a clear breakout or “play the margin” by buying at support and selling at resistance.
Russell 2000 technical analysis – 1 hour time frame
Russel 2000 1 hour
On the 1-hour chart we can see that even though the price action remained within a certain range, the market continued to push higher highs and higher lows.
This could be a sign that the buyers could eventually break above resistance and continue the rally to expand to new heights.
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