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Hugo in HTO Trading,

Russell 2000: Taking a pause after making a new 2017 high

Since the beginning of the year the US Index gained almost 11.0% but last week remained flat with a minor gain of 0.23% and continues in a bullish phase since early September.

Last week the Index went back and forward without any clear direction but manage to close near the high of the week, in addition closed within the previous week range, which suggests being on the bullish side of neutral.

Stochastic is showing an extreme overbought market and is displaying lack of momentum.

After the strong rally that began in late August, Russell 2000 takes a pause to consolidate around the 2017 high at 1,517.9. The Index may begin a downward correction before another leg up.

Expecting a downward move to a Fibonacci retracement at 1,474.0 on a bounce from the 2017 high at 1,517.9 (scenario 1) however a break above 2017 high at 1,517.9 may trigger another bullish run up to a Fibonacci extension at 1,543.9 (scenario 2).