Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 71% of retail investor accounts lose money when spread betting and/or trading CFDs with this provider. You should consider whether you understand how spread bets and CFDs work and whether you can afford to take the high risk of losing your money.
Market Outlook

Chart of the week – US Small Cap 2000 sees further potential up move after major bullish breakout

Chart of the week – US Small Cap 2000

US Small Cap 2000 sees further potential up move after major bullish breakout

Short-term technical analysis

Time stamped: 7 Nov 2021 at 3:00pm SGT (click to enlarge chart)

Source: CMC Markets

  • The US Small Cap 2000 Index (a proxy for the Russell 2000 futures) has finally staged a major bullish breakout from its 7-month plus range configuration last week after it lagged the other major US stock indices since March 2021. Also, it has surpassed its previous all-time high of 2,367 printed on 3 November and ended last week with a fresh all-time closing high of 2,431.
  • Last week’s bullish move has indicated that the Index has resumed its medium-term impulsive up move sequence within its major uptrend phase in place since 19 March 2020 low of 956.
  • Even though the shorter-term 4-hour RSI oscillator has almost reached an extreme overbought level of 84% but it has not displayed any clear bearish divergence signal yet. In addition, its price action has just broken out of a major (7-month plus) range configuration and its current up move only has a duration of four days from the breakout day on 1 November. Hence, the probability of a multi-week pull-back/consolidation at this juncture is relatively low.
  • Watch the 2,390 key medium-term pivotal support (also the lower boundary of a short-term ascending channel from 28 October low) for a further potential up move towards the next resistance at 2,480/486 (upper boundary of the short-term ascending channel & a cluster of Fibonacci expansion levels).
  • On the other hand, a 4-hour close below 2,390 negates the bullish tone for a corrective decline to retest the former major range resistance now turns to pull-back support at 2,320 (also close to 61.8% Fibonacci retracement of the current up move from 28 October 2021 low to 5 November 2021 high).