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IWM: Push the Envelope

Monthly time frame:

  • From the June 2015 top IWM has breached the trend line and tagged the 0.382 retracement of the advance from the 2009 low
  • As I have already discussed in the SPX updates, IWM is also displaying a corrective pattern from its June 2015 top
  • For the time being the current rebound should be considered a countertrend move provided the January gap down at 112.60 is not closed
  • So far IWM has recovered above the trend line from the 2009 low but today it has been rejected at the resistance located at 107

IWM Monthly Chart
Larger Image

Weekly time frame:

  • Today the sharp rally from the February low has stalled at the 20 wma.
  • Probably the "countertrend" rebound is not over yet. An immediate roll over would be unusual given the strength shown during the past three weeks however price has gone too far in a straight line stretching the envelope to the limit.
  • We have two support references:

    (a) The trend line from the 2009 low, which stands at 104.60 +/-
    (b) The support located at 103: Line in the sand for a larger rebound

IWM Weekly Chart
Larger Image

Daily time frame:

  • Today's reversal has been unusual given yesterday's wide range body. Maybe it is an indication that the "envelope" was too stretched.
  • Now the issue is to determine if the countertrend rebound is over or if there is more upside in the cards. The most probable path will depend on the size of the current retracement. We have two support layers:
  • Support layer 1 = 10 dma - Trend line 2009 low (105.10 -104.30): If it is not breached odds should favor another up leg
  • Support layer 2 = 50 dma - gap (103 - 102.73): It is the line in the sand

IWM Monthly Chart
Larger Image

 


I provide Technical and Elliott Wave analysis of different asset classes: Stocks, Equity Indices, Fixed Income, Currencies and Commodities at the website: http://www.thewavetrading.com/

 

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