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US Dollar Chart Signals Recovery as S&P 500 Flounders

US Dollar Chart Signals Recovery as S&P 500 Flounders

2011-12-09 06:15:00
Ilya Spivak, Sr. Currency Strategist

THE TAKEAWAYUS Dollar technical positioning suggests a rally is ahead as a sharp downward reversal in the S&P 500 stokes safe-haven demand for the benchmark currency.

S&P 500 – Prices put in an aggressive Bearish Engulfing candlestick pattern below rising trend support-turned-resistance in place since mid-October, hinting a reversal lower is now underway as we suspected. Initial support lines up at 1225.71, the 23.6% Fibonacci extension level, with a break lower exposing the 38.2% barrier at 1184.14. Near-term resistance is at 1251.33, followed by the trend line (now at 1271.37).

US_Dollar_Chart_Signals_Recovery_as_SP_500_Flounders_body_Picture_5.png, US Dollar Chart Signals Recovery as S&P 500 Flounders

CRUDE OIL Prices broke through support at 99.79, exposing the next major downside barrier at 94.56. A break below this boundary targets 90.49. The 99.79 level has been recast as near-term resistance, with a push back above that seeing the next key upside junction at 103.35.

US_Dollar_Chart_Signals_Recovery_as_SP_500_Flounders_body_Picture_6.png, US Dollar Chart Signals Recovery as S&P 500 Flounders

GOLD Prices narrowly broke below support at 1711.13, the 23.6% Fibonacci extension. Sellers now look to challenge the rising trend line underpinning price action since late September, presently at 1694.74. The 23.6% Fib has been recast as immediate resistance, with a push back above that targeting the 14.6% level at 1746.08.

US_Dollar_Chart_Signals_Recovery_as_SP_500_Flounders_body_Picture_7.png, US Dollar Chart Signals Recovery as S&P 500 Flounders

US DOLLAR Prices put in a Bullish Engulfing candlestick above resistance-turned-support at 9823, a former Head and Shoulders bottom neckline, hinting the greenback is poised to move higher. Initial resistance stands at 9927, the 14.6% Fibonacci extension, with a break above that exposing the 23.6% level at 9982. Longer term, the implied Head and Shoulders bottom target is at 10237.

US_Dollar_Chart_Signals_Recovery_as_SP_500_Flounders_body_Picture_8.png, US Dollar Chart Signals Recovery as S&P 500 Flounders

Daily Chart - Created Using FXCM Marketscope 2.0

--- Written by Ilya Spivak, Currency Strategist for Dailyfx.com

To contact Ilya, e-mail ispivak@dailyfx.com. Follow me on Twitter at @IlyaSpivak

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