Thursday's Market Minute: Russell 2000 Range-Bound After Breakouts Breakdown

Russell 2000 futures tested a downside breakout in recent weeks but managed to claw back to their old stomping grounds. After the brutal upside fakeout-breakout that took traders for a roller coaster ride for much of November before plummeting, the small-cap contract bounced between the boundaries of the huge triangle price pattern that has encompassed the /RTY for most of 2021, as well as the 63-day Exponential Moving Average to the upside and the 252-EMA to the downside.

Now, the Russell has formed a tighter range between 2,140 and 2,280 in recent weeks, so any push beyond these levels could be worth watching. One potentially pivotal area is 2,215, the price level with the heaviest volume during the past year according to Volume Profile. Other key upside points to watch include the 21-EMA near 2,240, and the confluence of the 63-EMA and the upper triangle trendline near 2,268. To the downside, watch the 252-EMA, now near 2,160. Another critical thing about the Russell is the zone below 2,150.

This is an interesting (and potentially dangerous) zone for traders, because the area between 2,080 to 2,150 has been a key zone for bulls to step in and buy all year – if they can stomach the swings between these relatively wide demarcations. It’s an area of fast-moving prices and thin volumes, so trade wisely if prices start to get within this range.

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