Russell 2000 – Weekly Analysis
The volatile week is behind us. Will the next be even more volatile for RUT, or are there signs of recovery? In this weekly report, we’ll weigh the latest candles, trend alignment, Elliott Waves, and momentum to define the levels that matter next. Let’s dive in.
CANDLES
On Friday, I was watching the weekly candle: had it closed slightly below the prior green candle’s low, it would have confirmed a weekly Dark Cloud Cover reversal. Fortunately, the closing rally lifted the index 2.2% off the daily low. Instead of a potential bearish close on both the daily and weekly frames, we now have a Thrusting Line on the daily and a failed bearish setup on the weekly. Momentum across multiple smaller frames is exceptionally strong, and there is a fair chance of printing another green candle on Monday and extending the reversal on the 2D frame. While the Russell is not fully out of the bearish woods, the probability of a bullish reversal has increased significantly.
Overall, the index remains bullish until the weekly frame confirms a reversal.
ELLIOTT WAVES
Mid Term
Russell has been impulsive since April. On the green path, the index appears to have completed wave iv of 3 almost perfectly. Assuming wave iv is complete, I’ve slightly adjusted the channel’s slope and added another target area for wave 3 in green.
Inverse Head & Shoulders
Back on June 9, I highlighted an Inverse Head & Shoulders. On August 10, the pattern added a larger-degree shoulder. As noted then, “RUT could be looking at the potential for an enormous 30% rally over the next 5–10 months.”
On October 15, Russell reached the midpoint of the first target and has been consolidating rangebound since. So far, I see no reason to change the expectations for the extension.
Summary:
Russell’s long-term posture remains decisively bullish. The index is potentially done with the pullback we discussed in the monthly report. If this hypothesis confirms next week, the rally should resume, potentially adding 12+% over the next 2–3 months.
The outlook remains bullish for months—possibly quarters. Only a developed and confirmed reversal signal on at least the weekly frame would warrant an adjustment to this view. This week, bears had a solid chance but failed decisively.
Happy Trading!
