US Dollar Chart Signals Recovery as S&P 500 Flounders
THE TAKEAWAY – US 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).
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.
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 – 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.
Daily Chart - Created Using FXCM Marketscope 2.0
--- Written by Ilya Spivak, Currency Strategist for Dailyfx.com
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