Today was a great day on the RUT (TF) as it traded very methodically and predictably between well known support and resistance levels of 464 and 474 before it cracked 464 and fell apart all the way down to 450.
Yesterday I posted that 474 was still a very important level to clear and the RUT tested it twice creating a double top pattern on the 5 minute charts. Just before 12:00, it broke 464 support and for the rest of the day it was the smack down to 450 which was the next plausible support level.
In the context of the daily chart, this was just a minor pull back to the 20MA. If the bulls show up tomorrow it should bounce here at the 20MA and if it is to remain bullish, it must close above 464 which would be a 55% retrace of today's red bar. If it closes below 464 tomorrow I give the control back to the bears.
What was really bearish about today's close, was that it closed below the green uptrend line AND the dotted green neckline of the reverse head and shoulders pattern. Broken trendlines in my experience are some of the greatest subtle indicators available to us.
With that trend break, I would not be surprised if the move continued down tomorrow and retested the backside of the daily downtrend line in the 430 area. If it does, it may be a good area of support that give the RUT some more footing for another leg up. If it supports at 430 it would create a higher low on the daily charts and still keep this short term rally alive. With Monday's close at 480, the RUT daily chart did create a higher high. The next few days will show us if we have a higher low or if we head down to retest the resent lows.
In summary, it will go up or down, but at least you have some targets on both sides to shot for.
RUT Daily Chart:
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