Russell 2000 Technical Analysis – Tariffs headlines drive the value motion

Fundamental
Overview

The Russell 2000 has been keeping
the bid since last week as the softer than expected US inflation data gave the
market a boost.

We haven’t got any key
economic report since then and no comment from Fed speakers given that they are
in the blackout period.

The main driver of the
price action this week has been Trump and his tariffs threats. We saw a quick
dip on Tuesday as he talked about imposing 25% tariffs on Canada and Mexico
next week, but the market eventually erased the losses.

Overall, it seems like the
market is optimistic about tariffs and the news that Trump is
considering a 10% tariff on China might be a signal that he won’t be as aggressive as promised during his
campaign given that back then he talked about 60% tariff on China.

Russell 2000
Technical Analysis – Daily Timeframe

On the daily chart, we can
see that the Russell 2000 broke 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 that we now have an upward trendline defining the bullish momentum. If
we get a pullback into it, the buyers will likely step in around the trendline
to position for new highs with a defined risk below the trendline. The sellers,
on the other hand, will look for a break lower to increase the conviction for a
drop back into the 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 look for a bounce around the
2300 level, while the sellers will look for a break lower to target the 2200
level next. The red lines define the average daily range for today.

Upcoming
Catalysts

Today we get the latest US Jobless Claims figures, while tomorrow we conclude
the week with the US Flash PMIs.