Russell 2000 – Weekly Analysis

CANDLES

There are mixed signals emerging from Russell’s weekly closure. On one hand, the weekly candle closed above the confirmation line, forming a potential bottoming pattern. On the other, both the daily cash index and futures ended the week with bearish candles and combinations. The 3-day chart also shows signs of exhaustion, with 10 consecutive green candles—often a sign of an impending pullback.

If the bullish momentum is to continue, a bottom must form on the 10-day frame on Tuesday. The index is just a few points below the key level. A failure to hold would result in a strong Falling Three Methods formation—typically a powerful bearish continuation signal.

Since the previous weekly close, little has changed in the broader setup. Long-term frames remain firmly bearish, mid-term outlooks are leaning bullish with slightly improved odds, and short-term signals are at risk of flipping bearish.

As of Friday’s close, the index stands neutral to slightly bullish. Tuesday’s session will be pivotal for determining the next directional shift in momentum.

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?

ELLIOTT WAVES

Micro Path
(no change, just an updated chart)

The Russell may have completed an impulsive move down and is now forming a wave up that shows more overlap than typically seen in an impulsive wave.

This 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 result in the most structurally damaging and deepest correction. The green count remains on the table, but its probability has further decreased after this week.

At this point, all three counts remain valid, with the red and blue having slightly better odds.

Mid Term

Russell has moved very close to the invalidation level for the green impulse count. A move above the red line would mark a key technical shift, opening the door to several alternative paths. The upcoming week will likely be pivotal in determining the next direction. If the green count is invalidated, the blue count will take over as the primary scenario.

Summary:

Following April’s close, which further reinforced the long-term bearish outlook, the Russell Index has increased its bullish odds on the mid-term frames. However, the overall forecast remains largely unchanged. Despite the recent rebound, the broader picture continues to lean firmly bearish, suggesting the potential for a correction that could extend over multiple quarters—or even years.

From an Elliott Wave perspective, the two most probable scenarios still point to further downside.

That said, Tuesday could prove pivotal. If the Russell delivers a strong rally and confirms a bottom on the 10-day frame, the chances for a bullish transformation of the monthly chart will rise significantly.

Happy Trading!