Dollar Probes Higher as S&P 500 Nears Bearish Reversal Confirmation

2012-07-12 05:03:00 Ilya Spivak, Head Strategist, APAC

THE TAKEAWAY: The US Dollar is probing above near-term resistance as the S&P 500 nears completion of a bearish chart formation that would open the door to a larger selloff.

S&P 500 – Prices continue to push lower after completing a bearish Evening Doji Star candlestick pattern identified last week, taking out initial support at 1363.90 to expose the 1334.40-41.90 area. A daily close below this boundary confirms a Rising Wedge bearish chart formation, opening the door for a larger downward reversal. A Spinning Top candle at support hints at indecision and suggests a bounce may materialize before a support break. The 1363.90 level has been recast as near-term resistance.

Dollar_Probes_Higher_as_SP_500_Nears_Bearish_Reversal_Confirmation_body_Picture_5.png, Dollar Probes Higher as S&P 500 Nears Bearish Reversal Confirmation

Daily Chart - Created Using FXCM Marketscope 2.0

CRUDE OIL – Prices are consolidating above support at 84.14, the 23.6% Fibonacci retracement. Near-term resistance is at 88.40, the 38.2% level, with a break above that exposing the 90.00 figure. Alternatively, a breach of support targets the 81.19-52 area marked by the June 4 low and the 14.6% retracement.

Dollar_Probes_Higher_as_SP_500_Nears_Bearish_Reversal_Confirmation_body_Picture_6.png, Dollar Probes Higher as S&P 500 Nears Bearish Reversal Confirmation

Daily Chart - Created Using FXCM Marketscope 2.0

GOLD – Prices broke support at 1575.81, the 38.2%Fibonacci expansion, after putting in a bearish Evening Star candlestick pattern below falling trend line resistance set from late March. Sellers now aim to challenge the 50% Fib at 1555.61, with a break below that exposing the trend-defining 1522.50-32.45 area. The 1575.81 level has been recast as near-term resistance.

Dollar_Probes_Higher_as_SP_500_Nears_Bearish_Reversal_Confirmation_body_Picture_7.png, Dollar Probes Higher as S&P 500 Nears Bearish Reversal Confirmation

Daily Chart - Created Using FXCM Marketscope 2.0

US DOLLAR – Prices are testing above resistance at 10174, the 50% Fibonacci retracement, after taking out falling trend lineresistance set from late May. A break higher initially exposes targets the 61.8% level at 10209. Near-term support is marked by the trend line and reinforced by the 38.2% Fib at 10139.