US small caps at key level as Iran, crude and rates converge

As a result of the latest rebound, the price has gravitated back towards 2560, a former support level that’s now acting as resistance. Its proximity means it can be used for risk management when initiating trades, allowing for a stop to be placed on the opposite side of entry.

If the price remains capped beneath 2560, shorts could be set with a stop above, targeting the 200DMA initially or, beyond that, support at 2400. Alternatively, if we see a break above 2560, longs could be set with a stop below, targeting the 50DMA initially, with the April 2025 uptrend and 2680 other options before the record high of 2737 set in January.

The message from the oscillators is more neutral than bearish when it comes to directional bias. RSI (14) sits marginally beneath 50 and has been grinding higher, while MACD has crossed the signal line from below but remains in negative territory. With no clear evidence that bulls or bears are gaining the upper hand, it’s a reminder to keep an open mind when assessing potential setups.

I have no strong view on near-term directional risks given how fluid headlines relating to the Iran war remain, but positive news will likely benefit the Russell, or weigh significantly if tensions escalate again, given the linkages between energy prices, the interest rate outlook and, eventually, economic growth.