Russell2000 is touching the most significant level, acting as a strong upside resistance 1913, as seen on the monthly chart. This is a confluence of upside resistance and downside support. A break above this level exposes the 2000 and could indicate that we will have an upside reversal continuation but only if we get a confirmed break above 2000.
The Weekly Russell2000 chart reveals a possible fourth-wave pullback from a 2470 top. As long as the instrument is below 2000, we consider this the fourth wave downside consolidation, which should trigger a downside fifth wave extension finish to 1200. A break below 1718 is required to confirm this. A break above 1913 will lead to a powerful reversal higher and will give us other signals for the long trade entry.
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As the famous trader says…
“Never let a win go to your head, or a loss to your heart.”Â
Chuck D.
How to trade this?
Obviously, for Q3 2023, we have this upside resistance of 1900 which should be broken higher for an upside continuation. This means that now short trade entries have some advantage over long trade entries as this recent move higher is not sustainable. It would be best if you opened a short trade here first. The risk to reward on this trade is higher than 1 and the timing of the trade could be on Monday NY session to target 1730 with a stop loss above 1950.
