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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.
This article was written by FL Contributors at www.forexlive.com.
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