Technical Analysis

Russell 2000 Futures (RTY) Technical Outlook

In the global markets, a cautious stance prevails as investors await the release of the U.S. consumer price inflation data for March. This anticipation follows a strong U.S. jobs report last Friday that exceeded expectations, fueling speculation about the Federal Reserve’s interest rate plans.

Based on the inflation numbers, today’s news could send RTY higher. RTY has lagged the bigger indices; is it time for it to catch up?

Trade Opportunities:

Range-Bound Trading:

RTY traded within a well-defined range, oscillating between support and resistance levels. If the price drops back into the zone and to the bottom (unlikely right now), traders can capitalize on this by buying near the support level of approximately 2000. If the price remains above the range with significant volume and momentum, the previous all-time high around 2463 serves as a short-term target.

Momentum Trades:

  • Monitor the Supertrend indicator (on the daily chart) and the 50-day SMA for bullish signals.
  • If the price consistently trades above these indicators, it supports continued upward momentum, presenting entry points after minor pullbacks.

Entry Points:

  • Primary Entry: Around the 2000 level, which has been a reliable support zone.
  • Secondary Entry: A confirmed breakout above the range or a bounce from the Supertrend or 50-day SMA could offer additional entry points.

Stop Loss and Take Profit:

  • Stop Loss: Place the stop loss below the recent swing low or the 2000 support level, whichever provides a suitable risk-reward ratio.
  • Take Profit: Set initial targets near the 2100 resistance level for range trades, and consider higher targets if a breakout occurs.

Risk Management:

  • Adjust position size based on the volatility of the RTY and the distance to your stop loss.
  • Closely monitor economic indicators and news such as today’s inflation report that could impact the small-cap sector, as these factors may cause sudden price movements in the RTY futures.