In addition, the bounce since October counts as three waves, which suggests it is probably corrective (and, if so, would confirm the bearish pattern).
As price tests the resistance zone outlined on the weekly chart, note that the commodity channel indicator at the bottom of the chart is approaching a test of its zero line from below. That area on the indicator is often associated with a resumption of the trend that the CCI has identified (i.e., downward).
For those who may be looking for ways to take positions favoring a downward Russell 2000 price forecast, it is important to remember that the resistance elements and targets on the charts outline the basic areas to watch for a turn. As we saw with the October bounce, it is not easy to predict which specific element will be the one that produces a reversal.
Trading these kinds of swings requires that one be able to tolerate some price movement against one’s position, and it is improved by monitoring price developments on smaller time frames such as daily or intraday charts. It’s also essential to know ahead of time where to place stops that will take you out of the market if price goes too far against you.
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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.
