MSCI WORLD STOCK INDEX – Prices have put in an Evening Star bearish reversal candlestick formation below resistance at $1135.16, the 50% Fibonacci retracement of the 4/15-5/25 downswing. Initial support lines up at $1120.55, with a break below that exposing $1075.70.
US DOLLAR INDEX – Prices have rebounded sharply higher from support at 81.91, the 8/18 wick low, with the bulls now targeting resistance at 83.38, the 38.2% Fibonacci retracement of the 6/7-8/6 downswing. A break above that 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. Back-to-back Doji candlesticks at range resistance hint a downswing may be ahead, but substantive confirmation remains elusive for the time being.
GOLD – Prices have resumed their advance, lifting from support at the bottom of a rising channel established from the July low en route to challenge the record high at $1265.30. However, emerging signs of negative RSI divergence warn of a reversal downward around the corner. Initial support lines up at $1243.27.
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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