Last week I posted my analysis and bullish view on the iShares Russell 2000 Index (ARCA:IWM) with the inverted Head and Shoulders pattern with the neckline at $118. As I mentioned in my previous analysis, I was expecting a backtest of the breakout area and neckline at $118. This is exactly what followed as prices made a pull back with the rest of the market towards $118.
IWM has managed to reach the 38% retracement which was my target and I believe we could very well have seen the end of the downward correction. Worst case scenario, if we break below $117.89 (latest low) we could push towards the 61.8% retracement and the cloud support at $116.
I believe the $118 level is very strong support and I do not see many chances of breaking below it. IWM price bounced strongly after reaching and back testing the neckline support at $118. Breaking above $120.50 will increase the chances that the low is in and a new upward move towards $124-125 has started.
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