Russell 2000 futures (RTY) have hit a new all-time high, showing the market is moving upward. The trend started from the low in April 2025 and is now advancing as an impulse wave. Wave ((4)) ended at 2300.6, and wave ((5)) has begun with a strong structure.

Wave Patterns and Corrections

After wave ((4)), the index climbed in wave ((i)) to 2396.4, followed by a small pullback in wave ((ii)) to 2370.3. The index then surged in wave ((iii)) to 2545.8, with a brief consolidation in wave ((iv)) at 2516.6. Wave ((v)) took the index up to 2625, completing wave 1 at a higher level. Currently, we are in a corrective wave 2, retracing from the low on November 21 in a zigzag pattern. From the peak of wave 1, wave ((a)) fell to 2526.2, then wave ((b)) bounced back to 2590.3. Wave ((c)) is expected to drop lower towards the 2397–2471 range, which corresponds to the 100%–161.8% Fibonacci extension of wave ((a)). This area is likely to provide support for completing wave 2. If the pivot at 2300.6 holds, we could see more buying opportunities in the next 3, 7, or 11 swings, allowing the upward trend to continue. The Russell 2000 (RTY) has confirmed a strong bullish trend with a breakthrough to a new all-time high of 2625. We are currently experiencing a corrective pullback, which looks like a typical Wave 2 retracement. This is seen as a temporary pause and a potential buying opportunity, rather than the start of a new downtrend. For the coming weeks, our plan is to look for this correction to find support in the 2397–2471 price zone. This area is a key Fibonacci extension target for the current A-B-C pullback structure. As long as the price stays above the critical pivot of 2300.6, we expect buyers to step in.

Economic Environment and Strategy

This positive outlook is supported by recent economic data, which shows Q4 2025 GDP growth surprising us at an annualized 2.9%, along with easing inflation rates. The Federal Reserve’s pause on interest rate hikes in the latter half of 2025 has also created a favorable climate for smaller, domestically focused companies. These factors strengthen the fundamental basis for the index’s upward trend. Historically, small-cap stocks have often shown a “January Effect,” outperforming their larger counterparts at the start of the new year. For example, in the years following the market lows in 2020 and 2009, January saw strong investments in small-cap stocks as investor confidence returned. This trend suggests that the current dip may set the stage for a rally in early 2026. For derivative traders, this means we should be ready to take bullish positions as RTY reaches our target support zone. Selling out-of-the-money put credit spreads below 2397 could be a useful strategy for collecting premium while managing risk above the 2300 pivot. Alternatively, we could wait for signs of a bottom before buying call options or futures contracts, anticipating the next significant upward movement. Create your live VT Markets account and start trading now.

here to set up a live account on VT Markets now