In January of 2013 I took an interest in the strength of the Russell 2000 (RUT) and did some pretty simple chart analysis. Basically the RUT went from an uptrend channel to what I call a PUT, a Power Up Trend. Now that price has fallen out of the PUT, but is still well within the uptrend channel, let’s dig deeper using Fibonacci analysis.
Below is the annotated chart for the Russell 2000 from 2013.
From March 2009 to May 2011, the Russell 2000 moved up 525.98 points or +153.5%. This created the first Fibonacci support level of 605.58 which was hit and held. The low that week was 601.71 or only 0.63% below first support. Keep in mind this is a 20 year, weekly chart !
From there, the Russell 2000 proceeded to it’s target of 992.7, a +64.97% move. In the chart below you can see the RUT continued on to hit my first longer term target of 1200.
Now, let’s drill down to get a better view of levels to watch. In the 2 charts below, I’m going to outline the shorter term levels as well as the longer term target.
The first Russell 2000 chart tells us that we’re currently in a technical short-term downtrend with a target of 1092.62. Overhead resistance levels are 1138.43 and 1145.77. To reverse the downtrend, a weekly candle will need to push through and close above 1145.77.
In February and May of 2014, lows of 1082.72 and 1082.53 were made respectively. This will serve as strong support should we drop below the target of 1092.62.
In our final RUT chart, I’ve derived a longer term target of 1261.82 with support levels of 1111.28 and 1087.14. Price has pulled back to and held those support levels on 19 different weeks, 2 of those weeks being after the 1213.5 high was made.
If price continues to move up, as we approach the 1213.55 high I’ll revisit this chart and break it down to shorter levels. Thanks for reading.
Follow Dave on Twitter: @TheFibDoctor
No position in any of the mentioned securities at the time of publication. Any opinions expressed herein are solely those of the author, and do not in any way represent the views or opinions of any other person or entity.
