IWM (Russell 2000 ETF): Guiding Information
Monthly time frame:
- It has been one of the weakest equity indices during the collapse from last summer top (The trend line from the 2009 low did not hold). The decline could have been much more severe but on February after tagging the 0.382 retracement of the advance from the 2009 low it ended the month with a large bottoming tail, which was the igniting bar of the February-April surge.
- From the June top we have a sequence of lower lows/highs, but the decline has been corrective (3 wave down leg).
- The next resistance is located at the 20 m ma = 116. Then we have November-December lower high. A break above 120 would reverse the down trend and should open the door to revisiting the June top
Weekly time frame:
- The rally from the February low stalled at the 50 wma ( Almost at the 0.618 retracement of the decline from the June top)
- In my opinion if the trend line from the 2009 low holds odds should favor another up leg with an initial target at the December peak = 120
- The weekly Hammer candlestick could signal the end of the pullback from the April high
Daily time frame:
- There is a potential reversal pattern: yeserday´s doji has been followed by a gap up ending the day at the hod (White Marubozu)
- In addition it has reclaimed the 10 dma and the 50 dma
- The next hurdle is located at the range 111 (200 dma) – 111.51 (2o dma)
- In order to reverse the decline IWM has to break above 112.40
- Daily oscillators are mixed. It stands out the bearish cross and loss of the zero line of the MACD. While the RSI(14) in spite of not displaying a positive divergence it has breached the trend line from the April high. Next week it must reclaim the 50 line in order not to jeopardize today´s reversal pattern. And OBV has to improve.
60 minute time frame:
- Probably it is the most interesting time frame since we can see that with a Falling Wedge IWM could have concluded the corrective decline from the April high with a Zig Zag (ABC). If this is the case next week the support located at 109.60 must hold
- obviously it is not a done deal yet. The bearish cross of the 50 hma below the 200 hma (Yellow circle) suggests caution and close attention in order to minimize the risks, but it is the first step in the right direction.