In our last update [see: Sep 2, 2016 Update on RUT] I noted that the index was approaching a key Fib level that should produce a sizeable drop to backtest an important channel.
…with the .886 within a few points, we’ll find out. We should get a pullback at 1255.77 that would start by backtesting the broken purple channel…If it happens, the purple channel top  will likely hold.
RUT went on to test 1255 on Sep 7 and again on Sep 22 before reversing. Because the 2nd attempt to break out delayed the reversal, the channel backtest produced a slightly greater drop: an 8% drop to 1156 rather than the 1174 I originally forecast.
As expected, the channel top held. RUT has since rebounded by 10.2% and is approaching new highs. What’s next for this volatile index?
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