Trade of the week: short Russell 2000
We would like to use last week's bounce in the Russell 2000 to short it. We believe the index is likely to remain below its September 2025, 2024 and 2021 highs and expect it to soon revert lower.
(Partial video transcript)
This week's trading opportunity
Axel Rudolph: Hello and welcome to "Trade of the week" on 29th September, 2025. And, today I'd like to look at the Russell 2000 because, for me at least, we are right at a key resistance area, technically speaking.
If you look at my weekly chart, you can see that last week's high, which was a record high as we all know, was made marginally above the highs seen in 2024. And that, in turn, was made above, or around, the highs seen in 2021. So, you can see all these major highs here going back several years. And we are right there once again.
Now, what we saw last week on the weekly chart is basically a move up, a move down, and then more or less a close slightly lower than the open of the week, but it wasn't really that bullish. So, it's potentially saying that we are losing some upside momentum. But, more importantly, if you look at the daily chart, what we can see is basically that we made a new record high on the 23rd September. That was higher than the highs seen previously in the week on the 19th September. And yet, if you look at the Relative Strength Index (RSI), you can see we had a negative divergence. So we had this not confirming the oscillator, not confirming our new record high.
Now we did see a sell off after that negative divergence, so that might already have been it. And now we're bouncing back. But I personally see this as another opportunity to get into this short trade from last week because that key resistance I just mentioned, I believe is going to hold. We are, supposedly, in a time period of the year where, usually from a seasonal perspective, we do tend to decline. We haven't seen that or maybe not yet. And also, we've got nonfarm payrolls on Friday, so who knows what's going to happen.
So, what I would like to do is to short the Russell 2000 and do so around current levels, around 2447, with a relatively tight stop above the high at 2494, let's say, and the downside target taking us back, probably, towards the highs seen here in mid-August, to 2333. So that's the Trade of the week for this week.
Previous trading outcomes
And if we look back to last week, I wanted to go short the DAX 40, the German stock index. And we did so around 23,600. We did go down on Thursday by over 200 points, but we didn't hit my downside target. And now we're trading above our entry level. But our stop-loss is at 23,900. We're still below there so we will still keep this stop in place and see what will happen next.
This week's trade in summary
Coming back to this week's "Trade of the week", it is to go short the Russell 2000 around 2447 with a stop-loss around 2494, and a downside target around 2335.
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