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US Dollar Range Holding, SPX 500 Rally May Be Losing Steam

By , Currency Strategist
05 March 2014 23:07 GMT

Talking Points:

  • US Dollar Still Consolidating Above Familiar Trend Support
  • S&P 500 Bullish Momentum Might Be Starting to Dissipate
  • Crude Oil Turns Lower as Expected, Gold Prices May Follow

Can’t access to the Dow Jones FXCM US Dollar Index? Try the USD basket on Mirror Trader. **

US DOLLAR TECHNICAL ANALYSISPrices are still struggling to find direction, with trading locked in a narrow consolidation range above support at a rising trend line set from September 2012. A break above resistance at 10614, the 23.6% Fibonacci expansion, initially exposes the 38.2% level at 10673. Trend line support is now at 10559, with a reversal below that eyeing the February 17 low at 10520.

Forex_US_Dollar_Range_Holding_SPX_500_Rally_May_Be_Losing_Steam_body_Picture_5.png, US Dollar Range Holding, SPX 500 Rally May Be Losing Steam

Daily Chart - Created Using FXCM Marketscope 2.0

** The Dow Jones FXCM US Dollar Index and the Mirror Trader USD basket are not the same product.

S&P 500 TECHNICAL ANALYSISPrices recovered above the 23.6% Fibonacci expansion at 1863.60 to test rising channel top resistance at 1879.40. This barrier is reinforced by the 38.2% level at 1881.30. A break above the latter boundary exposes the 50% Fib at 1895.70. Emerging negative RSI divergence warns of ebbing bullish momentum and hints a turn lower may be ahead however. Sliding back below 1863.60 opens the door for another test of the channel floor, now at 1847.40.

Forex_US_Dollar_Range_Holding_SPX_500_Rally_May_Be_Losing_Steam_body_Picture_6.png, US Dollar Range Holding, SPX 500 Rally May Be Losing Steam

Daily Chart - Created Using FXCM Marketscope 2.0

GOLD TECHNICAL ANALYSIS – Prices put in a bearish Dark Cloud Cover candlestick pattern below resistance at a falling trend line set from April 2013, hinting a turn lower may be ahead. Negative RSI divergence bolsters the case for a downside scenario. Breaking below the 23.6% Fibonacci retracement at 1313.14 exposes the 38.2% level at 1287.48. Trend line resistance is now at 1356.08.

Forex_US_Dollar_Range_Holding_SPX_500_Rally_May_Be_Losing_Steam_body_Picture_7.png, US Dollar Range Holding, SPX 500 Rally May Be Losing Steam

Daily Chart - Created Using FXCM Marketscope 2.0

CRUDE OIL TECHNICAL ANALYSIS – Prices turned lower as expected after forming a bearish Dark Cloud Cover candlestick pattern. Sellers have moved to challenge support at 101.73, the December 27 high, a barrier reinforced by the 38.2% Fibonacci retracement at 99.85. A break below the latter level exposes the 50% Fib at 98.20. Alternatively, a turn back above the 23.6% retracement at 101.89 eyes rising trend line support-turned-resistance at 103.15.

Forex_US_Dollar_Range_Holding_SPX_500_Rally_May_Be_Losing_Steam_body_Picture_8.png, US Dollar Range Holding, SPX 500 Rally May Be Losing Steam

Daily Chart - Created Using FXCM Marketscope 2.0

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

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05 March 2014 23:07 GMT