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Dollar Capped at Chart Resistance, S&P 500 Reversal Risk Mounts

By , Currency Strategist
19 July 2013 04:44 GMT

THE TAKEAWAY: An attempted US Dollar recovery failed to overcome chart resistance while evidence of a forthcoming S&P 500 reversal lower continues to build.

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US DOLLAR TECHNICAL ANALYSIS – Prices are testing falling trend line resistance set from the July 8 high (now at 10860), with a break above that targeting the 23.6% Fibonacci retracement at 10882. Near-term support is in the 10790-803 area, marked by the 38.2% level and the June 24 high. A move beneath that initially eyes the 50% Fib at 10739.

Forex_Dollar_Capped_at_Chart_Resistance_SP_500_Reversal_Risk_Mounts_body_Picture_5.png, Dollar Capped at Chart Resistance, S&P 500 Reversal Risk Mounts

Daily Chart - Created Using FXCM Marketscope 2.0

S&P 500 TECHNICAL ANALYSIS – Prices put in a bearish Dark Cloud Cover candlestick pattern below resistance at 1687.40, the May 22 swing high, hinting a move lower is ahead. Negative RSI divergence bolsters the case for a downside scenario. Confirmation of a reversal requires a daily close below rising trend line support set from late June, now at 1684.40. In this scenario, the next level of support lines up at 1661.50, the 23.6% Fibonacci retracement. Alternatively, a break above 1687.40 exposes the 100% Fib expansion at 1710.90.

Forex_Dollar_Capped_at_Chart_Resistance_SP_500_Reversal_Risk_Mounts_body_Picture_6.png, Dollar Capped at Chart Resistance, S&P 500 Reversal Risk Mounts

Daily Chart - Created Using FXCM Marketscope 2.0

GOLD TECHNICAL ANALYSIS Prices put in a Bearish Engulfing candlestick pattern below resistance at 1297.75, the 38.2% Fibonacci retracement, hinting a move lower is ahead. Near-term rising channel support is at 1265.34, with a break below that eyeing the 23.6% level at 1252.80. Alternatively, a move above resistance sees the next upside boundary at 1334.08, the 50% Fib.

Forex_Dollar_Capped_at_Chart_Resistance_SP_500_Reversal_Risk_Mounts_body_Picture_7.png, Dollar Capped at Chart Resistance, S&P 500 Reversal Risk Mounts

Daily Chart - Created Using FXCM Marketscope 2.0

CRUDE OIL TECHNICAL ANALYSIS Prices pushed above resistance at 107.77, the 23.6% Fibonacci expansion, exposing the 38.2% level at 109.92. Negative RSI divergence warns of ebbing bullish momentum however and hints a reversal lower may be around the corner. A move back below 107.77 sees initial support at 106.44, the 14.6% Fib.

Forex_Dollar_Capped_at_Chart_Resistance_SP_500_Reversal_Risk_Mounts_body_Picture_8.png, Dollar Capped at Chart Resistance, S&P 500 Reversal Risk Mounts

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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19 July 2013 04:44 GMT