S&P 500 Tumbles as US Dollar Chart Setup Hints at Rebound

THE TAKEAWAY: The S&P 500 may be forming a double top as prices drop after testing the March and May swing highs while the US Dollar chart setup hints at a rebound.

S&P 500 – Prices turned lower as expected after putting in a Spinning Top candlestick at resistance in the 1415.10-24.90 area marked by the March and May swing tops. Initial support remains at 1392.10, with a break below that exposing a minor downside barrier at 1376.10 and a more significant one at 1363.90. Alternatively, a reversal higher through resistance initially targets 1440.20, the May 20 2008 high.

Daily Chart - Created Using FXCM Marketscope 2.0

CRUDE OIL – Prices recoiled from resistance at 97.82, the 61.8% Fibonacci retracement, to challenge near-term support at 95.41 (the February 2 low). A break below this barrier targets the 50% Fib at 93.90. Alternatively, a reversal higher through resistance exposes a falling trend line set from the late-February swing top, now at 99.24, as well as the psychologically significant $100/barrel figure.

Daily Chart - Created Using FXCM Marketscope 2.0

GOLD – Prices punched through resistance at 1658.55, the 50% Fibonacci retracement, as well as a major falling trend line set from the August 23 2011 swing high. The bulls now aim to challenge the 61.8% Fib at 1689.63, with a break above that exposing the 76.4% barrier at 1728.09. The 1658.55 level has been recast as near-term support, with a reversal back below that targeting the 38.2% retracement at 1627.46.

Daily Chart - Created Using FXCM Marketscope 2.0

US DOLLAR – Prices put in a Hammer candlestick above support at the bottom of a falling channel set from late May, hinting a rebound may be ahead. Initial resistance lines up at 10021 at the underside of a major rising trend set from the late-July 2011 bottom. A break above that targets the top of a steeper channel at 10061. Alternatively, a break below support exposes 9909.

Daily Chart - Created Using FXCM Marketscope 2.0

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

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