Last Friday, the Russell 2000 Index sold off at the close as we reduced risk 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. Ultimately, Iran declared the operation considered complete and we received reports of a general de-escalation, with the United States telling Israel it would not support retaliation. We may see some positive risk sentiment and likely a discrepancy with the economic data that will then be the focus.
Russell 2000 Technical Analysis – Daily Timeline
Russell 2000 Daily
On the daily chart we can see that the Russell 2000 Index has fallen into the key support zone around the 2020 level following another hot US CPI report and after a slight rebound it sold out once again over the weekend following news of Iranian retaliation. We can expect buyers to intervene around these levels with defined risk below support to position themselves for a rally to new highs. Sellers, on the other hand, will want to see the price fall to increase bearish bets until the next support at 1920.
Russell 2000 Technical Analysis – 4 Hour Time Frame
Russell 2000 4 hours
On the 4 hour chart we can see that if we were to get a bounce from support, sellers will have a good risk of rewarding the setup around the downtrend line where they will also find the red 21 moving average for the confluence. Buyers, on the other hand, will want to see the price rise to invalidate the bearish setup and increase bullish bets to new highs.
Russell 2000 Technical Analysis – 1 Hour Time Frame
Russell 2000 1 hour
On the hourly chart, we can see that besides the trendline and moving average, sellers will also find the 61.8% Fibonacci retracement level, adding further confluence to resistance around the 2045 level. We can also notice that the last lower leg has diverged with the MACD, which is usually a sign of weakening momentum, often followed by pullbacks or reversals. In this case, it could be a signal for a pullback in the downtrend line and give buyers greater conviction for the initial upward move.
Events to come
This week is a bit empty on the data front with only two notable reports. Today we have the retail sales data while on Thursday we will get the latest US jobless claims numbers.
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