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US Dollar Pullback Keeps Broader Bullish Setup Intact for Now

By , Currency Strategist
03 April 2012 07:08 GMT

THE TAKEAWAY: The US Dollar pulled back to key support as prices struggle to build upward momentum but overall positioning continues to warn of a bullish reversal.

S&P 500 – Prices took out 61.8% Fibonacci expansion resistance at 1415.70 to test the 76.4% level at 1421.40. The 61.8% level has been recast as support and is now reinforced by the lower boundary of a rising channel set the March 29 bottom. A break below this boundary sees initial support at 1411.10 and 1406.50, the 50% and 38.2% Fibs respectively. Alternatively, a break higher exposes the March 27 high at 1424.90.

US_Dollar_Pullback_Keeps_Broader_Bullish_Setup_Intact_for_Now_body_Picture_5.png, US Dollar Pullback Keeps Broader Bullish Setup Intact for Now

4hr Chart - Created Using FXCM Marketscope 2.0

CRUDE OIL As we suspected yesterday, crude moved higher after putting in an Inverted Hammer candlestick above support at 102.97, the 50% Fibonacci retracement. Prices closed above initial resistance at 104.75, the 38.2% Fib, with bulls now aiming to challenge the 23.6% level at 106.96. This barrier is reinforced by a falling channel top set from late February. The 104.75 level has been recast as near-term support.

US_Dollar_Pullback_Keeps_Broader_Bullish_Setup_Intact_for_Now_body_Picture_6.png, US Dollar Pullback Keeps Broader Bullish Setup Intact for Now

Daily Chart - Created Using FXCM Marketscope 2.0

GOLD Prices moved higher as expected after taking out resistance at 1690.04, the 23.6% Fibonacci retracement level. The bulls continue to target the 38.2% Fib at 1690.04, with a break above that exposing 1709.23. Near-term support remains in the 1658.51-1666.29 area.

US_Dollar_Pullback_Keeps_Broader_Bullish_Setup_Intact_for_Now_body_Picture_7.png, US Dollar Pullback Keeps Broader Bullish Setup Intact for Now

Daily Chart - Created Using FXCM Marketscope 2.0

US DOLLAR Prices remain wedged between resistance-turned-support at a falling trend line set from the mid-December swing high and a shorter-term downward sloping barrier capping the upside since mid-March. A break below 38.2% Fibonacci retracement support at 9935 exposes the 50% level at 9885. The 9935 level has been recast as resistance. On balance, a Bullish Engulfing candlestick pattern still points to al looming upward reversal and needs a daily close below the March 27 low at 9896 to be neutralized.

US_Dollar_Pullback_Keeps_Broader_Bullish_Setup_Intact_for_Now_body_Picture_8.png, US Dollar Pullback Keeps Broader Bullish Setup Intact for Now

Daily Chart - Created Using FXCM Marketscope 2.0

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

To contact Ilya, e-mail ispivak@dailyfx.com. Follow Ilya on Twitter at @IlyaSpivak

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03 April 2012 07:08 GMT