Shortly before the opening, the March E-mini Russell 2000 index sits in a strong position to breakout above last week’s high at 912.00. This move will resume the uptrend and could launch a huge rally following four days of consolidation.
There is a strong bid in the market this morning ahead of the European Central Bank’s monetary policy decision and weekly U.S. labor market data. Bullish traders are hoping ECB President Mario Draghi says something positive in his post-meeting news conference to drive up demand for higher risk assets. Long investors are also looking for a drop in weekly jobless claims to serve as proof of an improving economy.
Technically, on the upside, investors would like to see a breakout over 912.00 on strong volume. This would be a sign that the move is being driven by clarity and conviction. A breakout driven by weak volume will mean there is lingering uncertainty.
Given the short-term range of 891.10 to 912.00, the pivot price at 901.60 has proved to be an important sentiment indicator. After straddling this line for three days, consecutive closes above it appear to be indicating a strong bias to the upside.
Additionally, the March E-mini Russell 2000 is following an uptrending Gann angle at 901.10. This angle in conjunction with the pivot price has formed a support cluster at 901.60 to 901.10. A failure to hold this zone will be a strong sign that sentiment is turning lower.
