The market continues to march higher as the war in Israel hasn't spread to other Arab countries. In fact, yesterday the US intelligence has even reported that Iran was surprised by the Hamas attack. This has weighed on Crude Oil prices and eliminated the risk of a much bigger spike. Moreover, the US PPI report yesterday beat expectations, but it was mainly energy driven and the market brushed it aside as we got a big drop in Oil prices in October and even Fed's Waller sounded like a rate hike in November is not coming unless we get a very ugly CPI report.
Russell 2000 Technical Analysis – Daily Timeframe
On the daily chart, we can see that the Russell 2000 continues to rally towards the key 1820 resistance zone where we have the confluence with the trendline and the 50% Fibonacci retracement level. This is where we can expect the sellers to step in with more conviction to position for another drop into the lows.
Russell 2000 Technical Analysis – 4 hour Timeframe
On the 4 hour chart, we can see that we got a break above the minor downward trendline and the resistance around the 1760 level which increases the odds of further upside into the 1820 resistance zone. The buyers are likely to keep on piling in around these levels to position for another impulse to the upside before taking some off the table near the major trendline.
Russell 2000 Technical Analysis – 1 hour Timeframe
On the 1 hour chart, we can see more closely the support around the 1760 level where the buyers had also the confluence with the 38.2% Fibonacci retracement level and the red 21 moving average. A break of the most recent high should see the bullish momentum increasing until the Russell 2000 reaches the 1820 resistance zone. The sellers will be waiting at the 1820 resistance zone, but we might see them piling in already if the price drops from here and falls back below the 1760 support and the trendline maybe because of a hot CPI release.
Upcoming Events
Today we will get the most important report of the week, that is the US CPI report. The market is likely to focus on the core measures and react positively to lower than 0.4% monthly rate readings. At the same time, we will also see the latest US Jobless Claims data which is an important labour market report. Tomorrow, we conclude the week with the University of Michigan Consumer Sentiment report.
