Russell 2000 Top level analysis

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Russell 2000 Index (Small and Mid Cap) Futures high level analysis

The Russell 2000 is a great instrument to trade if you are looking to get started trading Share Index Futures.  There are Micro and Mini contracts available offering very affordable margin requirements for the Micro and great returns on the Mini.  Below is a high level analysis from the monthly chart down to the daily, setting out our expectations on the different timeframes in order to guide our trading over the next period.

Monthly chart

The RTY is in a very extended but not yet fully compounded move higher with all-time highs from March being threatened again after having had a period of four months going sideways.  A realistic shorting level would be around 2400.  The 2100 level appears to be holding price up, but the level may not hold again opening up a potential drop all the way down to around 1600.  Watch the shorting opportunity closely as it may be imminent.

Weekly chart

The weekly RTY has been ranging between 2100 and 2360 since the middle of January this year.  Price action has been rejecting from both high and low areas.  The move higher is extended and compounded and the failure of price to run higher is an indication that a correction is imminent.  The first target is around the 2000 mark with secondary and tertiary targets at 1900 and 1600 respectively, lining up well with expectations from the monthly.

Daily chart

The daily RTY chart, like the weekly and monthly has been ranging for quite a long time with the last confirmed high being slightly higher than the previous, but still lower than all-time highs.  The current short leg is now fully engaged and settled with a target at previous lows around 2200 if not 2100 which is the major level.  Bear in mind, this may just be the beginning of the move on the weekly and monthly charts but it none the less sets an important milestone to check as you are trading the slower timeframes.  Following the daily, you know that there may be a correction on the way which in no way changes your outlook on the slower charts but it can calm your mind and stop you from taking profit too early in a trade that has much more to give.  The Daily will also give you general direction on a daily basis which will aid day and/or swing trading.

Conclusion

The RTY is near all time highs and is extended on all timeframes.  An entry short near 2400 should generate very good profits on the longer timeframes with profit targets at 2200, 2100, 1900 and 1600.  Daily chart price action is currently running short and could well break down towards 2100 before installing a correction although resistance will be encountered at 2200 which may turn price higher for a possible short entry around 2400.

This type of analysis should benefit you whether you are trading for long, medium or short term gains and only aims to give you levels of significance and areas where to enter and exit trades.  Lower timframe analysis is then required to ensure that optimum entry levels are achieved.

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