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A couple of weeks ago we mentioned this in regards to $RUT: “recent highs have seen a divergence in volatility compression. No new lows on the volatility index were achieved, which could suggest a change in character. Also $RUT failed to tag the upper trend line when making the most recent highs. This could be suggestive of waning strength“.
We showed this chart:
Since then $RUT has indeed weakened considerably and $RUT has broken its wedge to the downside:
We can also observe that $RUT’s underlying volatility index as broken to the upside.
On the 2 hour chart we can note the most oversold readings since February:
There is support here in this vicinity including the .236 fib level which currently is being tested:
$RUT is also trading outside of its daily Bollinger band for the 2nd day in a row, hence this could be a bounce zone.
On a further breakdown there is very strong support confluence at the .382 fib near 1620/1621.
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