The Russell 2000 (RTY) futures market looks set for continued bearish movement.
This index, which tracks the performance of small-cap stocks, has been stuck in a down trend for the last two weeks.
However, it is still at a low price. If it can make it back to the downtrend line, that could be a good place to start looking for more downside.
So, let’s take a look at the vulnerable RTY market and see how a bear trade might set up down the road…
Return to the Downtrend Line?
Here’s how we see the market shaping up for the Russell 2000 Index futures contract…
The RTY hourly time frame is in a down trend. The market is making lower lows and lower highs.
Entry: Counter trend line break bearish near the downtrend line.
Stop: In the buy zone above the entry.
Once or if the market gives the entry, it will be a good idea to turn to the five minute time frame and look for Tunnel Trader / Destination Trader / Chandelier Trader short ideas towards the one hour down Fibonacci price target 1,813.90.
The Bottom Line
There are multiple ways to trade the futures, stock and other markets. We can trade the indexes, both up and down, as well as individual stocks…
But one of the most exciting strategies has to do with using futures and options together for added leverage.
If you’re interested, check out the important P.S. below…
For more on the markets as well as trading education and trading ideas like this one, look for the next edition of Josh’s Daily Direction in your email inbox each and every trading day.
I’ll be bringing you more of my stock and futures contract trading tutorials as well as some additional trading ideas.
And before you go, head on over to the Traders Agency YouTube channel for breaking market news, live trading sessions, educational videos and much, much more!
Keep on trading,
P.S. My new trading program with my colleague and options expert Jeff Tompkins expands our trading opportunities from futures with a series of weekly options.
This is something that you won’t want to miss…