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US Dollar at Trend-Defining Support as S&P 500 Builds Higher

US Dollar at Trend-Defining Support as S&P 500 Builds Higher

Ilya Spivak, Head Strategist, APAC

THE TAKEAWAY: The US Dollar finds itself at long term trend-defining support after the S&P 500 soared to challenge the 1400 figure, with a break lower marking a key reversal.

S&P 500 – Prices launched higher to clear resistance at a falling trend line set from late March and narrowly overcome the horizontal barrier at 1392.10. The bulls now aim to challenge the 1400 figure, with a break above that exposing channel top resistance currently at 1411.00. The 1392.10 level as been recast as near-term support, reinforced by the trend line now at 1387.00.

US_Dollar_at_Trend-Defining_Support_as_SP_500_Builds_Higher_body_Picture_5.png, US Dollar at Trend-Defining Support as S&P 500 Builds Higher

Daily Chart - Created Using FXCM Marketscope 2.0

CRUDE OIL Prices broke above resistance at 90.88, the 14.6% Fibonacci retracement, with buyers now aiming to challenge the July 19 high at 93.21. The 90.88level has been recast as support, with a push back below that exposing the 23.6% Fib at 89.45.

US_Dollar_at_Trend-Defining_Support_as_SP_500_Builds_Higher_body_Picture_6.png, US Dollar at Trend-Defining Support as S&P 500 Builds Higher

Daily Chart - Created Using FXCM Marketscope 2.0

GOLD Prices put in a Bullish Engulfing candlestick pattern above rising trend line support, hinting a move higher is ahead. Near-term resistance lines up in the 1620.45-35.70 congestion area, with a push beyond that initially exposing 1671.49. Trend line supports line up at 1586.28 and 1570.42.

US_Dollar_at_Trend-Defining_Support_as_SP_500_Builds_Higher_body_Picture_7.png, US Dollar at Trend-Defining Support as S&P 500 Builds Higher

Daily Chart - Created Using FXCM Marketscope 2.0

US DOLLAR Prices are testing support at a major rising trend line that has guided the greenback higher since late July 2011, a barrier reinforced by the bottom of a falling channel carved out over the past two months. A break lower would mark a material trend reversal and initially expose 9924. A bounce sees the first layer of resistance at 10041, with a push beyond that aiming for the channel midline at 10080.

US_Dollar_at_Trend-Defining_Support_as_SP_500_Builds_Higher_body_Picture_8.png, US Dollar at Trend-Defining Support as S&P 500 Builds Higher

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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