- Point of control (POC), FIB 50% retracement acts as RTY tumbles.
- Difficult to find a high probability trade.
- Monitoring larger indices will prove beneficial when it comes to trading RTY.
Recap
In last weeks analysis of RTY, we saw that the Russell was at a critical point where it was testing the point of control line for the volume profile indicator, the 50% fib retracement, and a major resistance level. We knew that there would be a lot of buying pressure required in order for RTY to move higher. The bulls were not strong enough, however, and price has fallen 3.6% since then. Let’s take a fresh look at RTY and what we can expect moving forward.
Technical Analysis
Point of control (POC): As we have discussed in many of the technical analysis articles. The POC line tends to act like a magnet, attracting price toward it. It can be a hurdle for price to get through as well, depending on how significant the POC measurement has been regarding time. The POC on RTY is a powerful one because we measure it all the way back to January 2022. Price was unable to break this level ($1998.8) and has now begun falling.
50% Fib Level: This was also a resistance level along the way for RTY and it came in at a very similar level to the POC line. It is at ($2011). It shows us that whenever there are a lot of different levels that could act as resistance, price will have a much more difficult time than usual to break through it.
Resistance level: The resistance level is also at the same price as the Fib level and the POC. This added further strength to the bears.
Zooming In
Taking a look at the daily chart close-up, it is difficult to find a high-probability trade. We could see support form around the 38% Fib level at $1917, which coincides with the 50 moving average. Price could also dro pall the way down to the 23% Fib level again before finding support once more.
It is important to monitor other indices, if we see NQ, ES, and YM making highs, it will likely drag RTY with it. If we see them falling, RTY is more likely to drop more drastically along with the major indices.
