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US Dollar Retreats as Chart Positioning Points to Risk Appetite Recovery

By , Currency Strategist
28 May 2012 03:31 GMT

THE TAKEAWAY: The US Dollar is pulling back after setting a 17-month high as technical positioning across financial markets hints at a broad recovery in risk appetite.

S&P 500 – Prices are testing resistance at 1331.70 marked by the 123.6% Fibonacci expansion, with a break above that exposing the 100% level at 1347.70. Near-term support is at 1304.80, a former resistance at the top of a broken falling channel set from the May 1 high, with a break below that exposing the October 27 swing top at 1292.90.

US_Dollar_Retreats_as_Chart_Positioning_Points_to_Risk_Appetite_Recovery_body_Picture_5.png, US Dollar Retreats as Chart Positioning Points to Risk Appetite Recovery

Daily Chart - Created Using FXCM Marketscope 2.0

CRUDE OIL Prices put in a Harami candlestick pattern above resistance-turned-support at 90.14, the September 7 closing high, hinting a corrective bounce may be ahead. Positive RSI divergence reinforces the case for an upside scenario. Initial resistance lines up at 92.51, a former support marked by the December 16 low, with a push above that targeting 95.41 (another former bottom now acting as resistance at the February 2 low).

US_Dollar_Retreats_as_Chart_Positioning_Points_to_Risk_Appetite_Recovery_body_Picture_6.png, US Dollar Retreats as Chart Positioning Points to Risk Appetite Recovery

Daily Chart - Created Using FXCM Marketscope 2.0

GOLD Prices continue to consolidate above support in the 1522.50-1532.45 area. Near-term trend line support-turned-resistance lines up at 1589.00. A break above this boundary exposes the 1600/oz figure followed by the top of a channel set from late February, now at 1621.73.

US_Dollar_Retreats_as_Chart_Positioning_Points_to_Risk_Appetite_Recovery_body_Picture_7.png, US Dollar Retreats as Chart Positioning Points to Risk Appetite Recovery

Daily Chart - Created Using FXCM Marketscope 2.0

US DOLLAR Prices are turning lower below resistance at 10241, the 100% Fibonacci expansion level. Initial support lines up in the 10134-41 area, marked by the 76.4% expansion and the October 2011 swing high. A break lower on a daily closing basis exposes the 61.8% Fib at 10078.

US_Dollar_Retreats_as_Chart_Positioning_Points_to_Risk_Appetite_Recovery_body_Picture_8.png, US Dollar Retreats as Chart Positioning Points to Risk Appetite Recovery

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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28 May 2012 03:31 GMT