US Dollar Chart Setup Still Favors Gains, S&P 500 Probing Lower

THE TAKEAWAY: US Dollar technical positioning continues to broadly favor gains while the S&P 500 continues to cautiously probe lower toward trend-defining support.

S&P 500 – Prices continue to drift lower after putting in a bearish Harami candlestick pattern below the top of a Rising Wedge chart formation carved out since late November. Yesterday’s break of support at 1408.80, the 38.2% Fibonacci expansion level, exposes the Wedge bottom at 1390.20 and 23.6% expansion at 1383.00. A daily close below the latter level is needed to confirm a more meaningful bearish reversal.

Daily Chart - Created Using FXCM Marketscope 2.0

CRUDE OIL – Prices completed a Descending Triangle chart pattern with a break through support at 104.75, the 38.2% Fibonacci retracement level. The setup implies a measured target at 99.57 from here, with interim Fib support levels at 102.97 and 101.19 along the way. The 104.75 level has been recast as near-term resistance.

Daily Chart - Created Using FXCM Marketscope 2.0

GOLD – Unchanged from yesterday: “Prices reversed back through the 23.6% Fibonacci retracement at 1666.29 after finding resistance at the 38.2% level (1690.04). Sellers now target the 38.2% Fib expansion level at 1634.81, with a break below that exposing the 50% boundary at 1615.48. The 1666.29 level has been recast as near-term resistance.”

Daily Chart - Created Using FXCM Marketscope 2.0

US DOLLAR – Prices are testing through the 38.2% Fibonacci retracement at 9935 to challenge support at a rising trend line set from the February 8 low. The barrier is reinforced by the former resistance at a falling trend line set from mid-December and the 50% Fib at 9885. A Bullish Engulfing candlestick pattern broadly argues for an upside scenario and would need a close below 9896 to be neutralized. Near-term resistance remains at 9997, the 23.6% retracement.

Daily Chart - Created Using FXCM Marketscope 2.0

--- Written by Ilya Spivak, Currency Strategist for Dailyfx.com

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