The tensions in the Middle East have risen on late Tuesday as a rocket hit a hospital in Gaza killing hundreds of people and sparking a global outrage. As a consequence, Jordan cancelled the summit that was scheduled between the US President Biden, the Palestinian President Abbas and the Egyptian President al-Sisi in Amman.
On a domestic side, the strong US Retail Sales data was followed by a rally in Treasury yields with the 10yr approaching 5.00%. This tightening in financial conditions might be weighing on the stock market, especially in this part of the cycle when the past rate hikes should start to feed through the economy faster.
Russell 2000 Technical Analysis – Daily Timeframe
On the daily chart, we can see that the Russell 2000 bounced on the key support around the 1720 level but got rejected from the red 21 moving average again and erased almost all the gains soon after. The buyers are likely to step in with a defined risk below the support once again to position for a rally into the resistance around the 1820 level where we can find the confluence with the trendline and the 50% Fibonacci retracement level.
Russell 2000 Technical Analysis – 4 hour Timeframe
On the 4 hour chart, we can see that the price has been printing lower highs into the 1720 support in what looks like a descending triangle. This might be a sign that the sellers are stronger, and we could see a break to the downside soon. Generally, the price can break on either side of the pattern and what follows is usually a strong and sustained move in the direction of the breakout, so this will be something to watch out for.
Russell 2000 Technical Analysis – 1 hour Timeframe
On the 1 hour chart, we can see more closely the pattern and the key levels with the 1720 support zone and the trendline defining the triangle. In such instances, is best not to trade within the triangle as the price action can be messy and erratic leading to false signals.
Upcoming Events
Today we will get the latest US Jobless Claims data and it will be interesting to see if the miss in Continuing Claims last week was just a blip or the start of a trend. Later in the day we will also hear from Fed Chair Powell where the market will be focused on any hint about the near-term policy outlook.
