The Fed last week it decided to pause the tightening cycle and settled in the 5.00-5.25% range. Their reason was the need for additional economic data before further rate hikes. Their goal is to carefully adjust the level of monetary tightening necessary to bring inflation down to the 2% target without causing undue hardship to the economy. The Russell 2000 reacted positively the day after the FOMC decision, rallying, but saw a slight rebound just before the June long weekend.

Russell 2000 Technical Analysis – Daily Time Frame

Russell 2000 daily

On the daily chart, we can see that the Russell 2000’s strong rally since breaking the 1723-1820 range has stopped at the key 1920 resistance zone. If price breaks above the level, it opens the door for a rally towards the 2030 resistance. Sellers are likely to lean on this strong level and will aim for a pullback to 1820 resistance turned supportwhile buyers may want to wait for a break higher before piling in with more conviction.

Russell 2000 Technical Analysis – 4 Hour Time Frame

Russell 2000 4 hours

On the 4-hour chart, we can see that the last hit at the 1920 resistance was diverging with
MACD. This is generally a sign of fading momentum, often followed by pullbacks or reversals. In this case, we could only see a decline if the disinflationary trend continues and the labor market does not weaken too much.

Russell 2000 Technical Analysis – Time Frame 1 Hour

Russell 2000 1 hour

On the 1 hour chart we can see that from a risk management point of view it would be better for buyers to lean on the support area at 1860 where we can find the previous swing low and 38.2%
Fibonacci retracement level of the entire rally to resistance at 1920. Sellers, on the other hand, will pile in even more aggressively if price breaks below this support zone to extend the selloff to 1820 support.

There is not much economic data available this week; however, we will hear from various members of the Fed, including Fed Chairman Powell, who will testify before Congress on Wednesday and Thursday. As the week progresses, we will also get the US Jobless Claims report on Thursday, followed by US PMIs on Friday.

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