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US Dollar May Pull Back Before Larger Rally Continues

US Dollar May Pull Back Before Larger Rally Continues

Ilya Spivak, Head Strategist, APAC

THE TAKEAWAY: The US Dollar may pull back to re-test resistance cleared yesterday before the larger advance resumes. The S&P 500 has scope for a parallel recovery.

S&P 500 – Prices put in an Inverted Hammer candlestick above support in the 1339.40-1347.40 area, marked by the 100% Fibonacci expansion and the 38.2% retracement of the rally from the December 19 swing low. The setup points to indecision and hints that a bounce may be ahead. Initial resistance lines up at 1363.50, the 76.4% expansion, with a break higher exposing 1370.60. Alternatively, renewed selling that pierces 1339.40 targets the 50% retracement at 1313.00.

US_Dollar_May_Pull_Back_Before_Larger_Rally_Continues_body_Picture_5.png, US Dollar May Pull Back Before Larger Rally Continues

Daily Chart - Created Using FXCM Marketscope 2.0

CRUDE OIL Prices continue to test support in the 95.78-96.56 area marked by a horizontal barrier in play since early November 2011 as well as the 100% Fibonacci expansion. Similarly to the S&P 500, an Inverted Hammer candlestick hints at the possibility of a corrective bounce. Near-term resistance lines up at 98.89, the 76.4% expansion. A break below support exposes 92.51.

US_Dollar_May_Pull_Back_Before_Larger_Rally_Continues_body_Picture_6.png, US Dollar May Pull Back Before Larger Rally Continues

Daily Chart - Created Using FXCM Marketscope 2.0

GOLD Prices are showing an Inverted Hammer above support at 1582.45, the 50% Fibonacci expansion level, hinting a bounce may be ahead. Initial resistance lines up at 1603.42, the 38.2% Fib. Alternatively, renewed selling pressure that takes prices through support would expose the 61.8% expansion at 1561.49.

US_Dollar_May_Pull_Back_Before_Larger_Rally_Continues_body_Picture_7.png, US Dollar May Pull Back Before Larger Rally Continues

Daily Chart - Created Using FXCM Marketscope 2.0

US DOLLAR Prices a showing a Hammer candlestick following the break of resistance at a falling trend line set from mid-March, hinting a corrective pull-back may be ahead before the larger advance continues. The trend line, now at 9960, has been recast as near-term support. Resistance stands at 10047, the April 5 swing high.

US_Dollar_May_Pull_Back_Before_Larger_Rally_Continues_body_Picture_8.png, US Dollar May Pull Back Before Larger Rally Continues

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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