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S&P 500 Rally Fails to Break Key Resistance, Dollar Pullback Hinted

S&P 500 Rally Fails to Break Key Resistance, Dollar Pullback Hinted

Ilya Spivak, Head Strategist, APAC

THE TAKEAWAY: Yesterday’s S&P 500 failed to overcome key resistance at the July 2011 swing high. The US Dollar may pull back before advance continues.

S&P 500 – Prices remain wedged between the July swing top at 1358.60 and the bottom of a rising channel set from late December, now at 1344.50. Negative RSI divergence argues for a turn lower, with a break below the channel bottom on a daily close basis exposing the 23.6% Fibonacci retracement at 1325.90. Alternatively, a push above resistance targets the May 2 high at 1376.10.

SP_500_Rally_Fails_to_Break_Key_Resistance_Dollar_Pullback_Hinted_body_Picture_5.png, S&P 500 Rally Fails to Break Key Resistance, Dollar Pullback Hinted

Daily Chart - Created Using FXCM Marketscope 2.0

CRUDE OIL Prices continued higher after breaking through resistance at 101.28, with the bulls pushing onward to challenge the mid-November swing top at 103.35. A break above that barrier targets 105.54. The 101.28 level has been recast as near-term support.

SP_500_Rally_Fails_to_Break_Key_Resistance_Dollar_Pullback_Hinted_body_Picture_6.png, S&P 500 Rally Fails to Break Key Resistance, Dollar Pullback Hinted

Daily Chart - Created Using FXCM Marketscope 2.0

GOLD The would-be Head and Shoulders setup hinted over recent days is starting to look unlikely as the right side of the formation becomes a bit too overextended. A Descending Triangle set from the February 3 high now looks like a more likely setup. The pattern also calls for losses, although like the H&S a close below support at 1714.05 is needed for confirmation. If that materializes, the bears will open the door for a test of 1677.05. Triangle resistance is now at 1730.33, with a break higher targeting 1763.00.

SP_500_Rally_Fails_to_Break_Key_Resistance_Dollar_Pullback_Hinted_body_Picture_7.png, S&P 500 Rally Fails to Break Key Resistance, Dollar Pullback Hinted

Daily Chart - Created Using FXCM Marketscope 2.0

US DOLLAR Prices turned lower after putting in a Hanging Man candlestick below support-turned-resistance in the 9823-56 region, with a deeper pullback from here seeing the first layer of major support at 9679. Alternatively, renewed upward momentum through resistance targets 9908.

SP_500_Rally_Fails_to_Break_Key_Resistance_Dollar_Pullback_Hinted_body_Picture_8.png, S&P 500 Rally Fails to Break Key Resistance, Dollar Pullback Hinted

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

To be added to Ilya's e-mail distribution list, send a note with subject line "Distribution List" to ispivak@dailyfx.com

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

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