Russell 2000 – Weekly Analysis

CANDLES

Last week I was very skeptical about possible Three Black Crows on the weekly frame due to one missing criterion — and rightly so. The weekly frame formed an Inverse Hammer which, together with the two previous candles, created a potential bullish Ladder Bottom. Adding to this, we now have an Inside Up on the daily frame and a Bullish Engulfing on the 3D frame, both supported by solid technicals. Together, these form a strong foundation for a short- to mid-term bottom.

At the same time, the 15D frame formed a Bearish Engulfing, and a similar threat remains active for the monthly candle. Technical support for both is weak, and the risk of rejection is significant.

Short-term: Bullish
Mid-term: Neutral, pending confirmation
Long-term (monthly): Bullish, with a risk of bearish reversal.

ELLIOTT WAVES

Mid Term

I removed the blue count as less probable and made a few adjustments to the green path. If the bottom is confirmed next week, I will be expecting a strong wave v of 3 between now and February.

Inverse Head & Shoulders

Back on June 9, I highlighted an Inverse Head & Shoulders pattern. On August 10, that structure developed a larger-degree right 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 zone and has been consolidating since. A Bullish Engulfing would likely complete the flag. The potential rally from the bottom to the midpoint of the flag target is about 17% over the next 2–3 months.

Summary:

Russell has possibly formed a bottom, creating a solid foundation for the next leg of a rally over the coming months. If the weekly bullish setup is confirmed next week, the index will be fully positioned for significant gains in the range of 15–20% over the next 2–3 months.

Happy Trading!