Technical Analysis

Russell 2000 Futures (RTY) Facing Critical Support after Breakdown

The Russell 2000 futures (RTY) have diverged strongly from major indices in 2023, with RTY down over 10% year-to-date while benchmarks like the S&P 500 post gains. RTY formed a symmetrical triangle consolidation pattern during most of 2022 that confined prices in a tight range. However, two weeks ago RTY broke decisively to the downside of this triangle formation.

RTY is currently trading around $1662 after breaking support around $1720. This breakdown is a bearish technical development and indicates downside momentum is accelerating. The RSI downturn from around 50 to near oversold levels at 30 confirms the intensifying weakness.

The silver lining is RTY is now approaching a major support zone between $1600 and $1650. This area lines up with the March 2022 swing lows and is a critical inflection point. A bounce could materialize as dip buyers step in near these key lows.

If the support zone is breached, further downside towards $1500 comes into focus. To repair some technical damage, RTY would need to reclaim the former triangle support near $1720. This would demonstrate the bears are exhausted and spark a relief rally.