THE TAKEAWAY: The US Dollar failed to make a decisive break higher at trend-defining resistance while the S&P 500 managed to defend its four-month uptrend.
S&P 500 – Prices followed the formation of a bearish Evening Star candlestick pattern with a break below rising trend line support set from late July, reinforcing the case for a double top at 1466.10. Sellers now aim to challenge support at 1424.90, the March 27 swing high. This barrier is reinforced by the bottom of a rising channel set from early June (1422.20). A break below that marks a significant medium-term trend reversal, initially exposing the 1400 figure. Trend line support-turned-resistance is at 1459.50.
Daily Chart - Created Using FXCM Marketscope 2.0
CRUDE OIL – Prices are testing resistance at the would-be neckline of an inverse Head and Shoulders bottom (92.58), with a break higher implying a measured upside target at 98.10. Support stands at 87.66, the 38.2% Fibonacci retracement. A drop below that targets the 50% level at 83.76.
Daily Chart - Created Using FXCM Marketscope 2.0
GOLD – Prices pushed lower to support at the bottom of a bearish Rising Wedge chart pattern (1761.49) after putting in a Dark Cloud Cover candlestick pattern at resistance in the 1790.55-1802.80 area. Negative RSI divergence argues in favor of a downside scenario. Support is reinforced by the 23.6% Fibonacci retracement at 1747.20, with a break below that targeting the 38.2% level at 1717.13. Alternatively, a break above 1802.80 initially targets 1818.95.
Daily Chart - Created Using FXCM Marketscope 2.0
Want to learn more about RSI? Watch this Video.
US DOLLAR – Prices turned lower after putting in a Harami candlestick pattern at resistance in the 9928-38 area, a barrier reinforced by the top of a falling channel set from the June swing high. Initial rising trend line support is at 9883, with a break below that targeting 9832. Alternatively, a daily close above the channel top exposes 9985.
Daily Chart - Created Using FXCM Marketscope 2.0
--- Written by Ilya Spivak, Currency Strategist for Dailyfx.com
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