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Stock, Commodity Positioning Hints US Dollar to Decline

By , Currency Strategist
29 June 2010 03:10 GMT

CRUDE OIL – Prices have taken out resistance at the 61.8% Fibonacci retracement of the 5/3-5/20 downswing ($78.40) following a break above trend line support-turned-resistance connecting major lows since September 2009. From here, the door is open for a test of the $80.00 figure as well as the 76.4% Fib at $81.76.

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MSCI WORLD STOCK INDEX – Prices have found support at $1079.47, the 50% Fibonacci retracement of the 5/25-6/21 upswing. A Shooting Star candlestick pattern followed by a Doji hints the bears have lost momentum and a rebound is ahead, although confirmation is required on a convincing bullish close for the forthcoming session. Near-term resistance lines up at $1091.00 and is reinforced by the psychological barrier at the $1100 figure.

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GOLD - Prices have formed a bearish Rising Wedge chart formation below $1260.00, with the downward bias reinforced by clear negative divergence on 14-day relative strength studies as well as Bearish Engulfing candlestick pattern. Confirmation of a breakdown requires a break of resistance-turned-support at $1240.00, an outcome that would open the door for a decline toward $1175.00.

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US DOLLAR INDEX – The greenback has been range-bound for nearly two weeks having broken below a rising trend line established from the swing low in April 2009. Near-term support stands at 85.39, the 38.2% Fibonacci retracement of the 4/14/2009-6/7/2010 upswing, while resistance lines up at 86.66, the 23.6% Fib. We will look for a break of either of these levels to establish a firmer read on the near-term directional bias.

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29 June 2010 03:10 GMT