Russell 2000 trading idea: towards a return below 1700 points

The Russell 2000 could return to its recent low in the short term

In terms of technical analysis, the underlying trend of the Russell 2000 has been indisputably bearish since the beginning of the year, the index has evolved under a bearish bias and below its 200 session moving average.

After a brief rebound in the past two weeks, the outlook is once again bearish in the near term as the Russell just formed a bearish engulfing pattern yesterday, below the long term bearish bias.

The Russell 2000 may be in the process of starting a new down leg, at least to the recent low of around 1640 points, before eventually attempting another rebound if the economic outlook improves or if inflation appears to slow faster than expected.

The new short-term bearish outlook would theoretically be invalidated if it rebounds above Monday’s high of around 1845 points. In this case, a continuation of the rebound up to 1900 points would be expected.

Entry: sale of less than 1820 points

Stop: 1850 points

Goal: 1640 points

Risk / return ratio: 6

Follow the evolution of US Russ 2000 prices with IG.

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