Last Friday, the NFP report massively beat forecasts with 336K jobs added against 170K expected. The unemployment rate remained unchanged at 3.8% and average hourly earnings were a touch lower. Overall, the market viewed it as a good release with the soft-landing narrative prevailing. Over the weekend, Hamas launched a big attack against Israel which might cause some risk aversion in the markets, although it's likely to be short-lived as long as the conflict remains in the Levant.
Russell 2000 Technical Analysis – Daily Timeframe
On the daily chart, we can see that the Russell 2000 rallied from the key support zone around the 1720 level following the strong NFP report. The price stalled at the blue 8 moving average but the target for the buyers might now be the 1820 resistance 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 rally from the key support run into a strong resistance level where we have the confluence of the previous swing level, the red 21 moving average, the 50% Fibonacci retracement level and the minor trendline. The sellers are likely to defend this level if the price comes back into it and position for further downside with a defined risk above the trendline. The buyers will want to see the price breaking higher to increase the bullish momentum and target the 1820 resistance.
Russell 2000 Technical Analysis – 1 hour Timeframe
On the 1 hour chart, we can see that last Friday the price broke out of the consolidation around the support zone and rallied into the resistance before selling a bit into the close. Today, we might see the Russell 2000 opening lower following the weekend events, but the buyers should pile in around the 1734 level with a defined risk below the low to position for a major rally into the 1820 resistance. The sellers, on the other hand, will want to see the price breaking lower to increase the bearish momentum and target a break of the support and new lows.
Upcoming Events
This week we have some important inflation reports. On Wednesday, we will get the US PPI data and later in the day the FOMC Meeting Minutes. On Thursday, it will be the time for the main release of the week, that is the US CPI report, and at the same time we will see the latest Jobless Claims figures. Finally, on Friday we will get the University of Michigan Consumer Sentiment report.
