The Russell 2000 Index ($RUT) has found buyers every time price has ventured into the 600-zone over the last three months. With price also testing a major area of pivot-based support, the $RUT could be on the verge of a swift advance soon.
Trading Range
The Russell 2000 Index has traded within a clear trading range that spans from 600 to 670 over the last three months. Every test at the extremes of the range has led to swift reversals in price in the following two weeks.
Price is now testing the bottom of the range at 600, which indicates a decision point for this index. If price breaks through the bottom of the range, it must commit to a downside break, which would lead to much more selling pressure ahead – likely to the 555 support zone.
However, since buyers have seen value at this level over the last few months, a bullish reversal is the most likely outcome. Add to this the fact that price has also formed a bullish hammer pattern at the bottom of the range, and we could see clear strength ahead. Therefore, a rally of between 20 and 60 points is not out of the question.
Double Pivot Hot Zone
Price is also testing a double-pivot hot zone from 601.60 to 604.50, which consists of S1 and L4 support. Since price has honored the pivots throughout the month thus far, this additional layer of confluence could lead to responsive buying participation ahead.
If price remains above 600, look for a push to 628 over the next few days.
Let’s see what happens!
Cheers!
Frank Ochoa
PivotBoss.com
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