Dollar Gains Momentum as S&P 500 Setup Threatens Drop Below 1300

THE TAKEAWAY: The US Dollar continues to build upward while S&P 500 technical positioning is warning of a major selloff that threatens to take prices below the 1300 figure again.

S&P 500 – Prices continue to push lower after completing a bearish Evening Doji Star candlestick pattern identified last week, taking out the bottom of a Rising Wedge formation carved out since early June to rest in the familiar 1334.40-41.90 support area. A daily close beyond this area offers final confirmation of a significant near-term reversal with a measured downside target at 1269.90. Interim support levels line up at 1308.90 and 1290.10. Near-term resistance is at 1343.50, the Wedge bottom.

Daily Chart - Created Using FXCM Marketscope 2.0

CRUDE OIL – Prices are consolidating above support at 84.14, the 23.6% Fibonacci retracement. Near-term resistance is at 88.40, the 38.2% level, with a break above that exposing the 90.00 figure. Alternatively, a breach of support targets the 81.19-52 area marked by the June 4 low and the 14.6% retracement.

Daily Chart - Created Using FXCM Marketscope 2.0

GOLD – Prices broke support at 1575.81, the 38.2%Fibonacci expansion, after putting in a bearish Evening Star candlestick pattern below falling trend line resistance set from late March. Sellers now stand to challenge the 50% Fib at 1555.61, with a break below that exposing the trend-defining 1522.50-32.45 area. The 1575.81 level has been recast as near-term resistance.

Daily Chart - Created Using FXCM Marketscope 2.0

US DOLLAR –Prices are testing resistance in the 10209-19 area marked by the 38.2% Fibonacci expansion and 61.8% retracement levels. A break higher exposes the 50% expansion at 10279. Near-term support lines up at 10174, the 50% retracement, followed by the 10139-45 region at the confluence of the 23.6% expansion and 38% retracement barriers.

Daily Chart - Created Using FXCM Marketscope 2.0

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

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