THE TAKEAWAY: The S&P 500 chart setup calls for weakness but bears have been unable to produce meaningful follow-through. Meanwhile, the Dollar is inching lower.
S&P 500 – Prices completed a bearish Three Inside Down candlestick pattern below resistance at 1376.10, the May 2011 top, hinting a move lower is ahead (although follow-through has been worryingly absent over the past several days). 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.”
Daily Chart - Created Using FXCM Marketscope 2.0
CRUDE OIL – Prices put in a Bearish Engulfing candlestick pattern below resistance at 110.04, the 61.8% Fibonacci extension, hinting a move lower may be ahead. A break below initial support at 106.70, the 50% Fib extension, exposes the 38.2% level at 103.34. Alternatively, renewed bullish momentum that produces a daily close above resistance exposes the 76.4%Fib at 114.25.
Daily Chart - Created Using FXCM Marketscope 2.0
GOLD – Prices completed a bearish Three Outside Down candlestick pattern below resistance at the 1800/oz figure, a barrier reinforced by the 38.2% Fibonacci extension level. Initial support lines up at 1763.00, the confluence of former resistance at the December 2 high and the 23.6% Fib. A break below this barrier exposes 1705.34. Alternatively, abounce that sees prices issue a daily close above 1800.00 exposes the 50% extension at 1825.68.
Daily Chart - Created Using FXCM Marketscope 2.0
US DOLLAR – Prices are inching lower after put in a Bearish Engulfing candlestick pattern below resistance in the 9856-92 area. Near-term support lines up at 9786, with a daily close below this level exposing a familiar horizontal barrier at 9679.
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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