Last Friday, the Russell 2000 sold off into the close as we got risk off flows across the board due to news of imminent Iranian retaliation. Over the weekend, Iran launched its operation with drones and missiles against Israel but almost all of them were intercepted and there were no casualties. In the end, Iran said that the operation was deemed concluded and we got reports of general de-escalation with the US telling Israel that it won't support a retaliation. We might see some positive risk sentiment and probably gap up with the economic data being in focus next.
Russell 2000 Technical Analysis – Daily Timeframe
On the daily chart, we can see that the Russell 2000 fell to the key support zone around the 2020 level following another hot US CPI report and after a small bounce, sold off once more into the weekend following the Iran retaliation news. We can expect the buyers to step in around these levels with a defined risk below the support to position for a rally into new highs. The sellers, on the other hand, will want to see the price breaking lower to increase the bearish bets into the next support at 1920.
Russell 2000 Technical Analysis – 4 hour Timeframe
On the 4 hour chart, we can see that if we were to get a bounce from the support, the sellers will have a good risk to reward setup around the downward trendline where they will also find the red 21 moving average for confluence. The buyers, on the other hand, will want to see the price breaking higher to invalidate the bearish setup and increase the bullish bets into new highs.
Russell 2000 Technical Analysis – 1 hour Timeframe
On the 1 hour chart, we can see that besides the trendline and the moving average, the sellers will also find the 61.8% Fibonacci retracement level adding some extra confluence to the resistance around the 2045 level. We can also notice that the latest leg lower diverged with the MACD which is generally a sign of weakening momentum often followed by pullbacks or reversals. In this case, it could be a signal for a pullback into the downward trendline and give the buyers some more conviction for the initial upward move.
Upcoming Events
This week is a bit empty on the data front with just two notable reports. Today we have the Retail Sales data while on Thursday we get the latest US Jobless Claims figures.
