Russell 2000 – Weekly Analysis

CANDLES

After closing March and Q1 with strong bearish signals, the Russell has further strengthened its bearish odds on mid-term frames like the 10-day and 15-day charts. However, over the past three weeks, the index has made repeated attempts to establish a bottom. So far, it has succeeded on a few short-term frames but has yet to prove its case on the weekly.

Friday’s daily closure raised additional concerns. An Inside Day on Thursday was followed by a Hanging Man on Friday — a bearish combination that, while requiring confirmation, leans strongly negative. On the weekly frame, the Russell may have set up a potential Falling Three Methods formation, but it too awaits confirmation.

While the short-term frames are neutral, with a potential for bullish development, the mid- and long-term outlooks remain firmly bearish.

Unless bulls make a decisive move in the final days of April, the upcoming monthly, 2-month, and 4-month closures are poised to be brutally bearish. Of particular note, the 4-month frame is currently shaping into a Tower Top — an ominous signal that could mark the beginning of a deeper and more prolonged decline.

Classical Pattern – Double Top
(as discussed on April 19)

The Russell executed a textbook Double Top pattern in 2020—and based on current price behavior, it appears the index may be setting the stage to repeat that experience, much like Microsoft’s developing Head & Shoulders formation. While the pattern is still in the process of forming, it’s a scenario that deserves close attention.

The possible return to the 2020 lows has been featured on my all-time Russell chart for quite some time. This emerging setup simply reinforces that hypothesis from a different technical angle.

If confirmed, the implications could be significant. A move back to those levels would align with broader structural and momentum dynamics currently at play.

MACD Musings
(as discussed on March 15)

Russell is leading the charge in yet another critical development—it is the first among major U.S. indices to be on track for a monthly MACD cross. A signal of this magnitude is difficult to overlook. If the index fails to rally by at least 5% before the end of March, the cross will be recorded. However, even if this threshold is met, it may only delay the inevitable, as the MACD curve appears firmly set on its path.

Historically, this cross would fall somewhere between those recorded in 2018 and 2022, both of which led to significant declines. The concerning difference this time? Unlike those instances, where the index was only breaking through the 20-month moving average (MMA), Russell is currently losing the 50 MMA—a far more serious technical breach. If this level is lost and the MACD cross is confirmed, the next logical support zone could be found between the 100 and 200 MMA, implying a potential decline of 26-42% from the recent peak.

With Russell historically serving as a leading indicator for broader market moves, the question remains—will it once again signal the start of something bigger?

UPDATE: As of April 27, the Russell has declined 31% from its peak, reaching nearly the midpoint of the target area and bouncing off the lower boundary of the Bollinger Bands. This move could mark a potential bottom for the entire correction. However, after three weeks of attempts, the Russell has only managed to confirm a bottom on the daily frame, raising questions about the strength and sustainability of the rally. The final decision will likely come with the monthly closure.

For now, the index remains bearish until a confirmed reversal appears on the weekly frame.

ELLIOTT WAVES

Micro Path

The Russell may have completed an impulsive move down and has now initiated an attempt to form an impulsive wave off the recent lows—though the structure is still in development.

At this stage, the upward wave fits within both the red and blue counts. If RUT continues higher without significant overlaps, it could be unfolding as a potential impulse in green. Alternatively, the move may represent the first leg of a zigzag (abc) for wave B in red. Wave (iv) in blue also remains a possibility—and if that path plays out, it could lead to the most damaging outcome in terms of structure and depth.

At this point, all three counts are on the table. The red and blue have slightly better odds.

Mid Term

There are no changes to the mid-term outlook at this stage. The wave has reached the target zone for wave C of IV; however, several technical indicators suggest that wave 3 of a potential impulse may not be complete and could still extend further.

A possible destination for this extended move is marked as Alt 3 in red, highlighting the scenario where the current structure develops into a deeper leg before any significant reversal or consolidation occurs.

Green:

In this scenario, wave B completed above the origin of wave A, making it a running flat. Waves 1 and 2 of C are possibly complete, wave 3 is underway.

Blue:

The index formed an expanding ending diagonal and is falling with the first wave down.

A return to the October 2023 lows appears highly probable across all scenarios. The key factor is that the wave structure off the October 2023 lows has been corrective, most likely forming a diagonal. Notably, the October low of $1600 aligns as the midpoint of the MACD estimate, adding further technical confluence to this projection.

If the prospective wave 3 in green extends as outlined—particularly if the move unfolds within April—the entire impulsive structure may stretch into the $1000–900 target area. This scenario would align closely with the Double Top projection we discussed earlier, reinforcing the broader bearish outlook from both structural and pattern-based perspectives.

Summary:

The Russell Index forecast remains unchanged, with only a few very minor adjustments. This week’s developments did not bring any major updates. While the index has recently bounced, the mid- and long-term outlook remains firmly bearish, and it is on track to close April with strong bearish signals on the monthly, 2-month, and 4-month frames. Unless a major rally occurs in the final three days of the month, the bear market is likely to continue.

From an Elliott Wave perspective, the index may have completed a very significant impulsive move down, with a solid probability of being extended by another leg lower.

The Russell remains firmly bearish until a clear and confirmed reversal appears on at least the weekly frame.

Happy Trading!