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US Dollar at Risk of Deeper Losses as S&P 500 Launches Toward 1400

US Dollar at Risk of Deeper Losses as S&P 500 Launches Toward 1400

2012-07-19 07:13:00
Ilya Spivak, Head Strategist, APAC
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THE TAKEAWAY: US Dollar technical positioning warns of deeper losses ahead while the S&P 500 has taken out critical resistance and may move to challenge 1400 anew.

S&P 500 – Prices took out resistance at 1363.90, exposing the July 5 high at 1380.60 and the horizontal barrier at 1392.10. A break above the latter boundary targets the 1400 figure and the May 1 high at 1415.10. The 1363.90 level has been recast as near-term support. Overall positioning still argues for a developing Rising Wedge formation (albeit somewhat re-imagined compared to what we looked at previously), a setup warning of a brewing downward reversal in the weeks ahead.

US_Dollar_at_Risk_of_Deeper_Losses_as_SP_500_Launches_Toward_1400_body_Picture_5.png, US Dollar at Risk of Deeper Losses as S&P 500 Launches Toward 1400

Daily Chart - Created Using FXCM Marketscope 2.0

CRUDE OIL Prices are probing above the 90.00 figure after taking out the 38.2% Fibonacci retracement at 88.40. The next key layer of resistance lines up at 91.84, the 50% Fib, with a break higher exposing the 61.8% retracement at 95.29. The 88.40 level has been recast as near-term support.

US_Dollar_at_Risk_of_Deeper_Losses_as_SP_500_Launches_Toward_1400_body_Picture_6.png, US Dollar at Risk of Deeper Losses as S&P 500 Launches Toward 1400

Daily Chart - Created Using FXCM Marketscope 2.0

GOLD Prices slipped back below 1575.81, the 38.2%Fibonacci expansion, exposing the 50% level at 1555.83. This barrier is reinforced by a rising trend line set from the May 16 low. A break downward exposes the 1522.50-32.45 region. Near-term resistance lines up at the 1600/oz figure, a psychological barrier compounded by the presence of the 23.6% Fib.

US_Dollar_at_Risk_of_Deeper_Losses_as_SP_500_Launches_Toward_1400_body_Picture_7.png, US Dollar at Risk of Deeper Losses as S&P 500 Launches Toward 1400

Daily Chart - Created Using FXCM Marketscope 2.0

US DOLLARPrices took out support at the bottom of what appears to be a Flag formation set from the June 20 low, hinting at downward continuation from here. Sellers are now testing through interim support at 10070, with a break of that exposing the 10010-32 area marked by the early April top and the 61.8% retracement. If fully realized, the Flag setup implies a measured target at 9935. The formation’s lower boundary, now at 10089, has been recast as near-term resistance.

US_Dollar_at_Risk_of_Deeper_Losses_as_SP_500_Launches_Toward_1400_body_Picture_8.png, US Dollar at Risk of Deeper Losses as S&P 500 Launches Toward 1400

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

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