<p class=“MsoNormal“>As the Fed came out more
hawkish than expected, the market sold off on higher risks of
overtightening and a worse than expected recession, bringing the Russell 2000 index into focus.</p><p class=“MsoNormal“>Bear Market Headwinds for Broader Market, Russell 2000</p><p class=“MsoNormal“>These are two of the
worst possible things for the stock market and should result in a
continuation of the bear market. The <a target=“_blank“ href=“https://www.forexlive.com/news/china-takes-the-final-step-to-embrace-living-with-covid-20221227/“ target=“_blank“ rel=“follow“>China
reopening news</a> during the Christmas holidays can have two
implications:</p><p class=“MsoListParagraphCxSpFirst“>·
It may help with global growth and reduce the
chances of a hard landing.</p><p class=“MsoListParagraphCxSpLast“>·
Increase inflationary pressures.</p><p class=“MsoNormal“>Both the options though, lead
to the Fed possibly being forced to go higher than their expected terminal rate,
which brings us back to the original risks: overtightening and deep recession.</p><p class=“MsoNormal“>RUSSELL
2000 Technical Analysis</p><p class=“MsoNormal“>In the
daily chart above, we can see how the Russell 2000 price, after falling off a cliff out of
the FOMC meeting, pulled back to the nearest swing low <a target=“_blank“ href=“https://www.forexlive.com/Education/technical-analysis-support-and-resistance-20220405/“ target=“_blank“ rel=“follow“>resistance</a> area at 1788-1798. </p><p class=“MsoNormal“>That looks
like a strong barrier as we saw several tests without successful breaks. If the buyers manage to breach
that level, the next possible upside target may be in the 1880-1900 region. If
the price fails though, the October low at 1642 will be the clear target.</p><p class=“MsoNormal“>In the 1-hour chart above, we
can see more closely the current rangebound price action with a <a target=“_blank“ href=“https://www.forexlive.com/Education/technical-analysis-support-and-resistance-20220405/“ target=“_blank“ rel=“follow“>resistance</a> near the 1800 handle and a
support at 1730. Ideally, you would want to stay out of such a market and
wait for a clear breakout before deciding what to do next. </p><p class=“MsoNormal“>Nevertheless,
one can try to play the Russell 2000 range selling at <a target=“_blank“ href=“https://www.forexlive.com/Education/technical-analysis-support-and-resistance-20220405/“ target=“_blank“ rel=“follow“>resistance</a> and buying at <a target=“_blank“ href=“https://www.forexlive.com/Education/technical-analysis-support-and-resistance-20220405/“ target=“_blank“ rel=“follow“>support</a> until the game stops.</p><p class=“MsoNormal“>Drilling down to the 15 minutes
chart, we can see that there’s a <a target=“_blank“ href=“https://www.forexlive.com/Education/technical-analysis-support-and-resistance-20220405/“ target=“_blank“ rel=“follow“>resistance</a> turned <a target=“_blank“ href=“https://www.forexlive.com/Education/technical-analysis-support-and-resistance-20220405/“ target=“_blank“ rel=“follow“>support</a> at the moment (orange line). This level should define
where the price may be headed next. In the first scenario, the price may
retest the level and run to the upside testing again the resistance. In the
second scenario, the price breaks down and falls to the support.</p>
hawkish than expected, the market sold off on higher risks of
overtightening and a worse than expected recession, bringing the Russell 2000 index into focus.</p><p class=“MsoNormal“>Bear Market Headwinds for Broader Market, Russell 2000</p><p class=“MsoNormal“>These are two of the
worst possible things for the stock market and should result in a
continuation of the bear market. The <a target=“_blank“ href=“https://www.forexlive.com/news/china-takes-the-final-step-to-embrace-living-with-covid-20221227/“ target=“_blank“ rel=“follow“>China
reopening news</a> during the Christmas holidays can have two
implications:</p><p class=“MsoListParagraphCxSpFirst“>·
It may help with global growth and reduce the
chances of a hard landing.</p><p class=“MsoListParagraphCxSpLast“>·
Increase inflationary pressures.</p><p class=“MsoNormal“>Both the options though, lead
to the Fed possibly being forced to go higher than their expected terminal rate,
which brings us back to the original risks: overtightening and deep recession.</p><p class=“MsoNormal“>RUSSELL
2000 Technical Analysis</p><p class=“MsoNormal“>In the
daily chart above, we can see how the Russell 2000 price, after falling off a cliff out of
the FOMC meeting, pulled back to the nearest swing low <a target=“_blank“ href=“https://www.forexlive.com/Education/technical-analysis-support-and-resistance-20220405/“ target=“_blank“ rel=“follow“>resistance</a> area at 1788-1798. </p><p class=“MsoNormal“>That looks
like a strong barrier as we saw several tests without successful breaks. If the buyers manage to breach
that level, the next possible upside target may be in the 1880-1900 region. If
the price fails though, the October low at 1642 will be the clear target.</p><p class=“MsoNormal“>In the 1-hour chart above, we
can see more closely the current rangebound price action with a <a target=“_blank“ href=“https://www.forexlive.com/Education/technical-analysis-support-and-resistance-20220405/“ target=“_blank“ rel=“follow“>resistance</a> near the 1800 handle and a
support at 1730. Ideally, you would want to stay out of such a market and
wait for a clear breakout before deciding what to do next. </p><p class=“MsoNormal“>Nevertheless,
one can try to play the Russell 2000 range selling at <a target=“_blank“ href=“https://www.forexlive.com/Education/technical-analysis-support-and-resistance-20220405/“ target=“_blank“ rel=“follow“>resistance</a> and buying at <a target=“_blank“ href=“https://www.forexlive.com/Education/technical-analysis-support-and-resistance-20220405/“ target=“_blank“ rel=“follow“>support</a> until the game stops.</p><p class=“MsoNormal“>Drilling down to the 15 minutes
chart, we can see that there’s a <a target=“_blank“ href=“https://www.forexlive.com/Education/technical-analysis-support-and-resistance-20220405/“ target=“_blank“ rel=“follow“>resistance</a> turned <a target=“_blank“ href=“https://www.forexlive.com/Education/technical-analysis-support-and-resistance-20220405/“ target=“_blank“ rel=“follow“>support</a> at the moment (orange line). This level should define
where the price may be headed next. In the first scenario, the price may
retest the level and run to the upside testing again the resistance. In the
second scenario, the price breaks down and falls to the support.</p>
This article was written by ForexLive at www.forexlive.com.