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US Dollar Breaks Out Higher as S&P 500 Snaps 2-Month Up Trend

US Dollar Breaks Out Higher as S&P 500 Snaps 2-Month Up Trend

2012-03-07 05:45:00
Ilya Spivak, Head Strategist, APAC
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THE TAKEAWAY: The US Dollar broke resistance capping prices since mid-December as the S&P 500 reversed sharply lower after an extended test of 2011 highs.

S&P 500 – Prices reversed sharply lower having lingered in the 1358.60-1376.10 area for three weeks, validating overt negative RSI divergence we have been monitoring for some time. Sellers now aim to challenge the 23.6% Fibonacci retracement at 1337.30, with a break below that exposing the 38.2% Fib at 1311.30.

US_Dollar_Breaks_Out_Higher_as_SP_500_Snaps_2-Month_Up_Trend_body_Picture_5.png, US Dollar Breaks Out Higher as S&P 500 Snaps 2-Month Up Trend

Daily Chart - Created Using FXCM Marketscope 2.0

CRUDE OIL Prices followed a bearish Three Outside Down candlestick pattern with a break below support at 105.82, the confluence of the 23.6% Fibonacci retracement and a rising trend line set from the February 2 swing bottom. Sellers now target the 38.2% Fib at 103.28. The 23.6% level has been recast as near-term resistance.

US_Dollar_Breaks_Out_Higher_as_SP_500_Snaps_2-Month_Up_Trend_body_Picture_6.png, US Dollar Breaks Out Higher as S&P 500 Snaps 2-Month Up Trend

Daily Chart - Created Using FXCM Marketscope 2.0

GOLD Prices took out support at 1687.97, the 38.2% Fibonacci retracement, exposing the 50% Fib at 1656.38 as the next downside objective. The 1687.97 level has been recast as near-term resistance.

US_Dollar_Breaks_Out_Higher_as_SP_500_Snaps_2-Month_Up_Trend_body_Picture_7.png, US Dollar Breaks Out Higher as S&P 500 Snaps 2-Month Up Trend

Daily Chart - Created Using FXCM Marketscope 2.0

US DOLLAR As we suspected last week, the greenback moved higher after putting in a Bullish Engulfing candlestick pattern. Prices have now cleared falling trend line resistance set from the mid-December swing high as well as the 38.2% Fibonacci expansion at 9928, hinting at continued upward momentum ahead. The bulls now aim for the 50% expansion at 10005. The 9928 level has been recast as near-term support and is reinforced by the channel top, now at 9903.

US_Dollar_Breaks_Out_Higher_as_SP_500_Snaps_2-Month_Up_Trend_body_Picture_8.png, US Dollar Breaks Out Higher as S&P 500 Snaps 2-Month Up Trend

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 Ilya 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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