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Forex Analysis: Dollar Finds Support, S&P 500 Hints as Weakness Ahead

By , Currency Strategist
21 November 2012 08:00 GMT

THE TAKEAWAY: The US Dollar may be readying to resume the advance launched from September’s low on swelling haven demand as S&P 500 positioning warns of weakness.

US DOLLAR TECHNICAL ANALYSIS Prices are retesting support near the 23.6% Fibonacci retracement (9993), a barrier reinforced by a rising trend line set from the October 17 low (9985). A break below the latter level targets the 38.2% Fib at 9945. Near-term resistance is at 10071, the November 16 high, with a reversal above that targeting the 38.2% Fib expansion at 10123.

Forex_Analysis_Dollar_Finds_Support_SP_500_Hints_as_Weakness_Ahead_body_Picture_5.png, Forex Analysis: Dollar Finds Support, S&P 500 Hints as Weakness Ahead

Daily Chart - Created Using FXCM Marketscope 2.0

S&P 500 TECHNICAL ANALYSIS – Prices rebounded as expected after completing Bullish Engulfing candlestick pattern. The bulls now aim to challenge the 38.2% Fibonacci retracement at 1392.80. A Hanging Man candle hints at indecision and warns that a pullback may be ahead. Near-term support is at 1373.40, the 23.6% retracement, with a drop below that aiming to challenge the November 16 low at 1342.10. Alternatively, a break above resistance exposes the 1400 figure and the 50% level at 1408.50.

Forex_Analysis_Dollar_Finds_Support_SP_500_Hints_as_Weakness_Ahead_body_Picture_6.png, Forex Analysis: Dollar Finds Support, S&P 500 Hints as Weakness Ahead

Daily Chart - Created Using FXCM Marketscope 2.0

GOLD TECHNICAL ANALYSIS Prices may be carving a bullish Inverse Head and Shoulders chart pattern. Confirmation requires a close above neckline resistance at 1737.28, 23.6% Fibonacci retracement. This would imply a measured upside target at 1802.06. Near-term support lines up at 1688.65, the 38.2% Fib. This is reinforced by the 1700 figure and a rising trend line at 1687.69. A push below the latter level exposes the 50% retracement at 1642.57.

Forex_Analysis_Dollar_Finds_Support_SP_500_Hints_as_Weakness_Ahead_body_Picture_7.png, Forex Analysis: Dollar Finds Support, S&P 500 Hints as Weakness Ahead

Daily Chart - Created Using FXCM Marketscope 2.0

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CRUDE OIL TECHNICAL ANALYSIS Prices pulled back from resistance at 89.48, the 23.6% Fibonacci expansion, after breaking above a falling trend line set from the September 14 high (now at 85.86). A drop below that exposes the November 7 low at 84.04. Alternatively, a push above resistance targets the 38.2% level at 92.88.

Forex_Analysis_Dollar_Finds_Support_SP_500_Hints_as_Weakness_Ahead_body_Picture_8.png, Forex Analysis: Dollar Finds Support, S&P 500 Hints as Weakness Ahead

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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21 November 2012 08:00 GMT