Russell 2000 trade idea before the FOMC today: 4.5 Risk vs Reward

June 12, 2024 at 11:44AM
Russell 2000 technical analysis and trade Idea for traders before the FOMC meeting📈💡

Based on the attached chart and the highlighted guidance, here’s a detailed trade idea for Russell:

Let’s break down the key elements of this trade setup:

Retest:

The price action appears to be revisiting a previous support level (horizontal line) after a pullback. This retest suggests a potential buying opportunity if the price bounces back up. 🛠️

Anchored VWAP:

The purple line on the chart indicates the Volume-Weighted Average Price (VWAP), acting as a dynamic support/resistance zone. A retest of this area, combined with the support level, strengthens the case for a long position. 📊

Trade setup details:

Trade setup: Long position on Russell with a reward-to-risk ratio of 4.5:1.

Entry point: Place a limit buy order at 2021.8 🛒

This entry point is just above the recent retest and the anchored VWAP, which serves as a confluence of support.

Stop loss: Set a stop loss at 2011.5 🚫

This means risking 10.3 points on the trade, ensuring a manageable risk.

Take profit: Aim for a target profit of 46.3 points, exiting at 2068.1 🎯

This target capitalizes on the potential upside with a favorable reward-to-risk ratio.

Partial profit strategy:

Initial partial profit:

Consider taking partial profits (50-80% of the position) when the price reaches the target zone 📊.

This approach helps to lock in gains and reduce exposure.

Adjust stop loss:

After taking partial profits, move the stop loss to the entry point (2021.8) to secure the remaining position 🔒.

This step ensures the trade remains risk-free for the remaining position.

Long-term position:

Swing trade potential:

Hold the remaining position for a longer-term swing trade, riding the potential upward momentum 📈.

This strategy allows for additional gains if the bullish trend continues.

Technical consideration:

Pattern analysis:

The trade is based on the descending wedge pattern visible in the chart, indicating a potential breakout 📉➡️📈.

The confluence of the retest and anchored VWAP adds to the trade’s validity.

Risk management:

Proper position sizing:

Ensure proper risk management and position sizing to protect your capital 🔐.

Only risk a small percentage of your trading account on any single trade to manage potential losses.

Note: This trade idea is shared for informational purposes only and is at the trader’s discretion and own risk. Always perform your own analysis and consult with your financial advisor before making any trading decisions.

This article was written by Itai Levitan at www.forexlive.com.

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Payment services for HUBFX are provided by The Currency Cloud Limited. Registered in England No. 06323311. Registered Office: Stewardship Building 1st Floor, 12 Steward Street London E1 6FQ. The Currency Cloud Limited is authorised by the Financial Conduct Authority under the Electronic Money Regulations 2011 for the issuing of electronic money (FRN: 900199) and The Currency Cloud Inc. which operates in partnership with Community Federal Savings Bank (CFSB) to facilitate payments in all 50 states in the US. CFSB is registered with the Federal Deposit Insurance Corporation (FDIC Certificate# 57129). The Currency Cloud Inc is registered with FinCEN and authorized in 39 states to transmit money (MSB Registration Number: 31000160311064). Registered Office: 104 5th Avenue, 20th Floor, New York , NY 10011 and CurrencyCloud B.V.. Registered in the Netherlands No. 72186178. Registered Office: Nieuwezijds Voorburgwal 296 – 298, Mindspace Nieuwezijds Office 001 Amsterdam. CurrencyCloud B.V. is authorised by the DNB under the Wet op het financieel toezicht to carry out the business of a electronic-money institution (Relation Number: R142701)

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