Featured Trade: Russell 2000 recent rebound appears to be losing momentum

Russell 2000 recent rebound may end soon.

Short-term technical outlook on Russell 2000/ US Small Cap 2000 Index (Fri 29 Mar)



click to enlarge charts

Key technical elements

  • The recent rebound of 3% seen in the US Small Cap 2000 Index (proxy for the Russell 2000 futures) from this Mon, 25 Mar swing low area has almost reached a significant short-term resistance of 1550.
  • The 1550 key short-term resistance is defined by the former minor ascending range support from 08 Mar 2019 low and a Fibonacci retracement/expansion cluster (61.8% retracement of last week’s slide from 19 Mar high to 25 Mar low & 1.00 expansion of the recent rebound from 25 Mar low to 26 Mar high projected from 27 Mar low) (see 1-hour chart).
  • Based on the Elliot Wave/fractal analysis, the rebound from 25 Mar low is likely to be a set of potential a/, b/ & c/ minor corrective wave sequence where the Index may start to unfold another impulsive downleg next.  
  • The rebound from 25 Mar low has started to lose momentum where the 1-hour Stochastic oscillator has shaped a bearish divergence signal at its overbought region coupled with the daily RSI oscillator that has remained below the 50 level.

Key Levels (1 to 3 days)

Pivot (key resistance): 1550

Supports: 1515 & 1500

Next resistance: 1570

Conclusion

If the 1550 key short-term pivotal resistance is not surpassed, the Index is likely to shape a potential drop to target the near-term supports of 1515 and 1500 in the first step.

On the other hand, a break above 1550 negates the bearish tone for an extension of the corrective rebound towards the next intermediate resistance at 1570 (also the medium-term descending trendline in place since its current all-time high area of 04 Sep 2018).   

Charts are from City Index Advantage TraderPro



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