US Dollar Breaks Out as S&P 500 Prepares to Resume Down Trend
THE TAKEAWAY – The US Dollar issued a major breakout while the S&P 500 dropped toward key support, with a breach lower marking the resumption of an aggressive down trend.
S&P 500 – Prices are edging toward validating the Flag bearish continuation chart setup we have been following over recent weeks, with a break below the formation’s bottom (now at 1138.45) clearing the way for reacceleration of the down move initiated in late July. A break through support today implies a rough measured downside target at 1044.45. Near-term resistance lines up at 1176.10.
CRUDE OIL – Unchanged from yesterday: “Prices are perched just above support at $84.61 – the 23.6% Fibonacci extension level – with a break below this boundary exposing the 38.2% level at $80.97 and validating the longer-term bearish implications of a Flag consolidation chart pattern. Initial resistance remains at the top of a falling channel set from early May, now squarely at the $89.00 figure.”
GOLD – Positioning is little changed from what we identified yesterday, with prices continuing working towards firm validation of a double top below the $1900/oz figure marked by a pair of Bearish Engulfing candlestick patterns. Near-term support remains in the $1702.90-1745.25 area, with resistance at a rising trend line set from early June (now at $1843.90) that had previously acted as support.
US DOLLAR – Prices are testing 50% Fibonacci extension resistance at 9882, with a break higher exposing the 61.8% level at 9930. Near-term support stands at 9831, the 38.2% extension. RSI studies are edging into overbought territory, hinting a near-term pullback may materialize after yesterday’s aggressive rally.
Daily Chart - Created Using FXCM Marketscope 2.0
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