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S&P 500 Rally May Be Losing Steam, Dollar Eyes Trend-Defining Support

S&P 500 Rally May Be Losing Steam, Dollar Eyes Trend-Defining Support

2012-01-24 03:24:00
Ilya Spivak, Head Strategist, APAC
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THE TAKEAWAYThe S&P 500 chart setup continues to hint at forthcoming weakness while the US Dollar continues to sink toward a trend-defining support level.

S&P 500 – A pair of Doji candlesticks below resistance at the top of a rising channel set from late December points to indecision and hints a move lower may be ahead. Initial support lines up at in the 1299.10-1293.30 region. Channel resistance is now at 1325.40.

SP_500_Rally_May_Be_Losing_Steam_Dollar_Eyes_Trend-Defining_Support_body_Picture_5.png, S&P 500 Rally May Be Losing Steam, Dollar Eyes Trend-Defining Support

Daily Chart - Created Using FXCM Marketscope 2.0

CRUDE OIL Prices continue to consolidate above support at 97.70, with the first layer of resistance still at 101.28. A break lower exposes resistance-turned-support at the top of a falling channel set from mid-November, now at 96.64. Alternatively, a push higher initially targets the mid-November high at 103.35.

SP_500_Rally_May_Be_Losing_Steam_Dollar_Eyes_Trend-Defining_Support_body_Picture_6.png, S&P 500 Rally May Be Losing Steam, Dollar Eyes Trend-Defining Support

Daily Chart - Created Using FXCM Marketscope 2.0

GOLD Prices are testing support-turned-resistance at 1677.05, a barrier reinforced by the top of a rising channel set from early January now at 1686.98. A break above the latter level exposes the 1700/oz figure. Channel support is now at 1654.13, with a daily close below that initially targeting 1638.84.

SP_500_Rally_May_Be_Losing_Steam_Dollar_Eyes_Trend-Defining_Support_body_Picture_7.png, S&P 500 Rally May Be Losing Steam, Dollar Eyes Trend-Defining Support

Daily Chart - Created Using FXCM Marketscope 2.0

US DOLLAR Prices continue to move lower after breaking the midline and top of a falling channel in place since mid-December, exposing a former Head & Shoulders neckline at 9823 as sellers’ next objective. A breach of this level on a daily closing basis would amount to a meaningful bearish change in tone for the greenback. The channel midline, now effectively at the 9900 figure, has been recast as near-term resistance.

SP_500_Rally_May_Be_Losing_Steam_Dollar_Eyes_Trend-Defining_Support_body_Picture_8.png, S&P 500 Rally May Be Losing Steam, Dollar Eyes Trend-Defining Support

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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DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

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