Simplistic Technical Analysis for Russell 2000 (October 19th 2014)

I am fairly new at trying to do technical analysis. But in this post, I thought I will give it a shot. I am looking at the Russell 2000 to understand the direction it will take.

We are looking at the one year candlestick chart for Russell 2000 on Yahoo stocks. I have added the following indicators to the chart.

1. Bollinger Bands at 26 days and 2 Standard deviation
2. 15, 50 and 200 day Simple Moving Averages
3. MACD indicator for 26, 12 and 9

The way I see it, based on last trading day of Friday 17th October 2014 the stock is set for a short term reversal. It has bottomed out at the 52 week low, and is set for a short term reversal, but for a further fall in the medium term.

There are a few things to consider.

1. Overall we are getting lower highs and lower lows, so long term trend is down. (Red arrows in the chart).

2. The latest down turn included three consecutive days of losses, which indicates the secular trend is down as well. (Indicated by red squares on the chart)

3. This is different from indicators of a reversal where we start with morning stars and end with evening stars (indicated in green boxes). Here we start with evening stars and end with morning stars meaning, the chart is failing to break a falling resistance line.

My amateurish predictions:

1. The index will rise to 1150 or 1160 in the near term (under a week), and then reverse and fall 70 to 100 points.

2. By end of 2 weeks, the index will be at 1040 or 1060.

This is my line in the sand. Lets see how it pans out.