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S&P 500 Chart Setup Favors Losses, US Dollar Testing Key Resistance

S&P 500 Chart Setup Favors Losses, US Dollar Testing Key Resistance

2011-09-14 09:47:00
Ilya Spivak, Sr. Currency Strategist
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THE TAKEAWAYS&P 500 technical positioning continues to favor losses after a period of consolidation while the US Dollar is testing above a major multi-month range resistance level.

S&P 500 – Prices continue to consolidate in a Flag chart pattern, broadly pointing to downward continuation. The resumption of overtly bearish momentum requires a break below 1137.15, the 38.2% Fibonacci extension level which currently closely coincides with the Flag formation bottom. Near-term resistance stands at 1172.89.

SP_500_Chart_Setup_Favors_Losses_US_Dollar_Testing_Key_Resistance_body_Picture_5.png, S&P 500 Chart Setup Favors Losses, US Dollar Testing Key Resistance

CRUDE OIL Positioning closely mirrors that of the S&P 500, with prices testing the top of a Flag chart formation reinforced by the upper boundary of a rising channel set from early May. Here too, the setup is hinting at bearish continuation pattern, with initial support lining up at the 23.6% Fibonacci extension level ($83.12).

SP_500_Chart_Setup_Favors_Losses_US_Dollar_Testing_Key_Resistance_body_Picture_6.png, S&P 500 Chart Setup Favors Losses, US Dollar Testing Key Resistance

GOLDA pair of Bearish Engulfing candlesticks may be marking a double top below the $1900 figure, with confirmation seen on a break of an upward-sloping neckline established since early August. Negative RSI divergence bolsters the case for a downside scenario. A breakdown at current levels would aim toward a measured target close to $1633.04, although an actual close below trend line support is needed before the implied objective can be calculated precisely.

SP_500_Chart_Setup_Favors_Losses_US_Dollar_Testing_Key_Resistance_body_Picture_7.png, S&P 500 Chart Setup Favors Losses, US Dollar Testing Key Resistance

US DOLLAR Prices are testing range resistance at 9764, a triple top in place since mid-May. While prices are testing above the boundary presently, a pair of Inverted Hammer candlesticks hints that a pullback is ahead, with only a daily close above 9764 sufficient to neutralize that warning signal. If a near-term reversal lower is to materialize, initial support lines up at 9699 and 9646. Alternatively, a break higher exposes 9887.

SP_500_Chart_Setup_Favors_Losses_US_Dollar_Testing_Key_Resistance_body_Picture_8.png, S&P 500 Chart Setup Favors Losses, US Dollar Testing Key Resistance

Created Using FXCM Marketscope 2.0

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