MSCI WORLD STOCK INDEX – Prices are testing resistance at $1135.16, the 50% Fibonacci retracement of the 4/15-5/25 downswing. A break above this barrier exposes the 61.8% fib (and early August swing top) at $1160.87. Alternatively, a reversal lower sees initial support at $1120.55.
US DOLLAR INDEX – Prices continue to consolidate above support at 81.91, the 8/18 wick low. Resistance lines up at 83.38, the 38.2% Fibonacci retracement of the 6/7-8/6 downswing. A break below near-term support clears the way for a return to the 80.00 figure while an advance past immediate resistance exposes the 50% fib at 84.40.
Longer term, Dollar positioning hints a majorHead and Shoulders bottom has been taking shape since mid-2004, pointing to a structural advance over the coming years that would amount to parity on the greenback’s exchange rate with the Euro.
CRUDE OIL –Prices continue to consolidate above horizontal support at $71.09, with near-term resistance lining up at $75.59. This barrier is reinforced by support-turned-resistance at the bottom of a rising channel set from late May, now at $76.57. A Doji candlestick at range resistance hints a downswing may be ahead.
GOLD – Positioning continues to point to an advance toward the record high at $1265.30 after the bulls took out resistance at the $1243.27 level. This juncture is now acting as support and is reinforced by the bottom of a rising channel that has confined prices since late July. Alternatively, a reversal lower that sees prices slip back below $1243.27 will target initial support at $1215.47.
Longer term, gold positioning reveals bearish cues with clear negative RSI divergence hinting that a major top may be taking shape. Confirmation of a downward reversal in line with our fundamental outlook requires a weekly close below a rising trend line set from the swing bottom in late 2008, now at $1198.36.
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