Russell 2000 Index Elliott Wave technical analysis [Video]

Russell 2000 Index Elliott Wave technical analysis

Function: Bullish Trend.

Mode: Impulsive.

Structure: Navy Blue Wave 1.

Position: Gray Wave 1.

Direction next lower degrees: Navy Blue Wave 2.

Details: Orange Wave 2 appears completed, now Navy Blue Wave 1 of 1 is underway.

Wave cancel invalidation level: 171.

Daily chart analysis overview

The RUSSELL 2000 daily chart shows a bullish trend taking shape through an impulsive Elliott Wave structure. The index has completed the Orange Wave 2 correction and has entered Navy Blue Wave 1 within the larger Gray Wave 1 structure. This position marks the early stage of a new impulse move that could drive significant upside momentum in upcoming sessions.

Navy Blue Wave 1 begins this fresh impulse cycle, typically marked by building momentum as the market establishes clear directional bias. Following Orange Wave 2’s correction, Wave 1 often shows steady, though not explosive, upward movement as the new trend foundation is set. Current patterns suggest that the upward move will likely grow progressively before reaching a correction.

Key levels and trading strategy

A critical level to monitor is 171, serving as the invalidation point for the bullish wave count. A move below this support level would invalidate the current structure and necessitate reassessment of the wave count. This level acts as protection for the low set by wave 2.

The daily timeframe offers important insights into the evolving wave structure. Participants should watch for classic wave characteristics such as gradually increasing volume and steady price progress. It is important to remember that Wave 1 often lacks the explosive strength typically associated with Wave 3.

Next steps and market outlook

The next major move expected is the formation of Navy Blue Wave 2 after the completion of Wave 1. This correction should provide a pullback opportunity before the anticipated emergence of a stronger Wave 3. Observing price action closely, along with momentum indicators, will be crucial for confirming the unfolding structure and identifying the transition into Wave 2.

Technical indicators and price patterns will offer key confirmation signals as the structure develops. The transition into Gray Wave 1 at a higher degree suggests stronger momentum waves are likely ahead, making the current phase critical for building positions aligned with the anticipated bullish trend.

Russell 2000 Index Elliott Wave technical analysis

Function: Bullish Trend.

Mode: Impulsive.

Structure: Navy Blue Wave 1.

Position: Gray Wave 1.

Direction next lower degrees: Navy Blue Wave 2.

Details: Orange Wave 2 appears completed, now Navy Blue Wave 1 of 1 is underway.

Wave cancel invalidation level: 171.

Weekly chart analysis overview

The RUSSELL 2000 weekly chart shows a bullish trend emerging through an impulsive Elliott Wave structure. The index has completed the Orange Wave 2 correction and now advances within Navy Blue Wave 1 inside the broader Gray Wave 1 structure. This setup marks the early phase of what could become a major upward move over the coming weeks, laying the foundation for a new bullish trend.

Navy Blue Wave 1 initiates this developing impulse, typically featuring steady price gains as the market builds directional strength. The end of Orange Wave 2's correction sets ideal conditions for Wave 1’s formation, where momentum often builds gradually before stronger advances in later waves. The weekly timeframe suggests that this may be the start of an intermediate-term trending move.

Market structure and key levels

The current formation shows the index moving into a potential substantial Gray Wave 1 at a higher degree, with Navy Blue Wave 1 acting as its sub-wave. This setup usually leads to stronger trending behavior as the market confirms its new directional bias. Traders should watch for classic signs such as improving technical indicators and increasing volume.

After Navy Blue Wave 1 completes, the index is expected to undergo a corrective Navy Blue Wave 2 phase before likely resuming its upward trend. The weekly perspective emphasizes the importance of this developing structure, suggesting traders monitor for clear wave progressions confirmed by price action and technical signals.

A crucial level to watch remains 171. A drop below this level would invalidate the bullish scenario and necessitate a reevaluation of the wave count.

Trading strategy and outlook

The analysis points toward preparing for potential bullish opportunities following the anticipated Wave 2 correction, recognizing that Wave 3 typically brings stronger and more dynamic momentum. The current phase is crucial for building trend-following strategies aligned with the potential for continued upside movement in the RUSSELL 2000.

Russell 2000 Index Elliott Wave technical analysis [Video]