Russell 2000 – Annual Review
Our long-term Russell forecast has remained largely unchanged for nearly a year, while the index has followed the major moves outlined back in January 2025. In this annual review, we evaluate the index technicals from multiple angles to determine whether any adjustments to our long- and mid-term strategies are required.
CANDLES
Russell ended 2025 with solid bullish signals on the 4-month frame and larger. The annual close can be interpreted as a variation of Three White Soldiers, which keeps the very long-term outlook strongly bullish.
In contrast, the quarterly and monthly frames were less convincing. Minor technical failures and doji-like candles point to potential weakness and the possibility of a pause in further development during the first two to three months of 2026.
That said, the index began 2026 with a very aggressive rally, and so far there are no signals suggesting an imminent reversal.
ELLIOTT WAVES
Very Long Term
The index has entered the target area for the all-time wave structure. While there is still room for further advance, upside potential may be limited.
Mid Term
I continue to track both the green and blue counts, with the green count remaining primary at this point. The index is approaching the upper boundary of a long-term trend and could face a strong rejection near the $2,670 area.
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.” So far, this leg has been developing as expected, with the index up about 22.5% since. The recent pullback can also be viewed as a smaller flag, with the target marked by the red rectangle.
Below is the full evolution of the charts since June.
Summary:
TRussell closed 2025 with solid bullish signals on the 4-month and larger frames, keeping the very long-term outlook constructive. The annual structure resembles a variation of Three White Soldiers, reinforcing the bullish bias at higher degrees. However, the quarterly and monthly frames showed some hesitation through minor technical failures and doji-like candles, suggesting a possible pause or consolidation phase in the first two to three months of 2026 rather than an immediate acceleration.
Despite that backdrop, the index entered 2026 with a very aggressive rally and has so far shown no clear reversal signals. Russell has now reached the broader target area for the all-time wave structure, where upside remains possible but may be increasingly limited. The index is also approaching the upper boundary of a long-term trend, an area around 2,670 that could act as a meaningful resistance zone.
From a pattern perspective, the longer-term bullish case remains intact. The Inverse Head & Shoulders structure identified in June 2025 continues to play out, with the index up roughly 22.5% since that call. The recent pullback can be interpreted as a smaller flag within the larger advance, keeping the green count primary while the next phase of the move develops.
Happy Trading!
