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S&P 500 Chart Setup Still Warns of a Turn Lower Ahead

S&P 500 Chart Setup Still Warns of a Turn Lower Ahead

Ilya Spivak, Head Strategist, APAC

THE TAKEAWAY: S&P 500 technical positioning continues to warn of a bearish reversal in the works below the May 2011 high as the US Dollar tests support.

S&P 500 – Unchanged from Friday: “Prices completed a bearish Three Inside Down candlestick pattern below resistance at 1376.10, the May 2011 top, hinting a move lower is ahead. Negative RSI divergence reinforces the case for a downside scenario. Initial support lines up at 1358.60 and is reinforced by a rising channel bottom. A break below that exposes the 23.6% Fibonacci retracement at 1331.40.”

SP_500_Chart_Setup_Still_Warns_of_a_Turn_Lower_Ahead_body_Picture_5.png, S&P 500 Chart Setup Still Warns of a Turn Lower Ahead

Daily Chart - Created Using FXCM Marketscope 2.0

CRUDE OIL Prices are testing 61.8% Fibonacci extension resistance at 110.04, with a break higher exposing the 76.4% level at 114.25. Near-term support lines up at 106.70, the 50% Fib extension. As we noted last week however, RSI studies are at their most overbought since April (the last time Iran-linked jitters inflated crude prices). That was followed by a sharp decline in May, so the threat of a reversal may be rising.

SP_500_Chart_Setup_Still_Warns_of_a_Turn_Lower_Ahead_body_Picture_6.png, S&P 500 Chart Setup Still Warns of a Turn Lower Ahead

Daily Chart - Created Using FXCM Marketscope 2.0

GOLD Prices continue to consolidate having taken out resistance at 1763.00, the December 2 high that closely coincides with the 23.6% Fibonacci extension level. Near-term resistance lines up at the 1800/oz figure and is reinforced by the 38.2% Fib. A break higher exposes the 50% level at 1825.68, while a reversal through support targets 1705.35.

SP_500_Chart_Setup_Still_Warns_of_a_Turn_Lower_Ahead_body_Picture_7.png, S&P 500 Chart Setup Still Warns of a Turn Lower Ahead

Daily Chart - Created Using FXCM Marketscope 2.0

US DOLLAR Prices put in a Bearish Reversal candlestick pattern below resistance in the 9856-92 area, with sellers now challenging support at 9786. A break below this juncture exposes a familiar horizontal barrier at 9679.

SP_500_Chart_Setup_Still_Warns_of_a_Turn_Lower_Ahead_body_Picture_8.png, S&P 500 Chart Setup Still Warns of a Turn Lower Ahead

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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