US Dollar On the Verge of Near-Term Trend Reversal as S&P 500 Sinks

THE TAKEAWAY: The US Dollar is on the verge of overturning the down trend established since mid-March while the S&P 500 is testing the lowest levels in two months.

S&P 500 – Prices are testing through 76.4% Fibonacci expansion support at 1363.50 to challenge the 1339.40-1347.40 area marked by the 100% expansion as well as the 38.2% retracement of the rally from the December 19 2011 swing low. A downward breach through this boundary exposes the 50% retracement at 1313.00.

Daily Chart - Created Using FXCM Marketscope 2.0

CRUDE OIL – The selloff marked by a Harami candlestick pattern identified last week continues, with prices testing support in the 95.78-96.56 area marked by a horizontal barrier in play since early November 2011 as well as the 100% Fibonacci expansion. A break below this region exposes 92.51. Near-term resistance stands at 98.89, the 76.4% expansion.

Daily Chart - Created Using FXCM Marketscope 2.0

GOLD – Prices are testing support in the 1629.60-1637.95 area marked by the bottom of a Triangle chart formation carved out since late March and the 23.6% Fibonacci expansion. The Triangle setup is typically indicative of continuation, which in this case carries bearish implications. A break through support initially exposes the 38.2% expansion at 1611.79. Triangle resistance is now at 1662.91.

Daily Chart - Created Using FXCM Marketscope 2.0

US DOLLAR – Prices continue to press higher after putting in a bullish Morning Star candlestick pattern identified last this week above trend line support set from late July 2011. The bulls are now challenging trend line resistance at 9973, with a break higher neutralizing the down trend established since mid-March and exposing the April 5 high at 10047. Near-term support is at 9906.

Daily Chart - Created Using FXCM Marketscope 2.0

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

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