S&P 500 Signals Rebound Ahead as US Dollar Stalls at Resistance

2012-10-16 02:46:00

Ilya Spivak, Head Strategist, APAC

THE TAKEAWAY: S&P 500 technical positioning hints that a rebound may be ahead, threatening the safe-haven US Dollar as prices stall ahead of trend-defining resistance.

S&P 500 – Prices put in a Bullish Engulfing candlestick pattern above trend-defining support at 1424.90, marked by the March 27 swing high and the bottom of a rising channel set from the June bottom, hinting a move higher is ahead. The first layer of significant resistance is in the 1463.80-66.10 area, defined by the underside of a previously broken rising trend line and the range top prevailing since mid-September. A break above that threatens to expose the 1500 figure. Alternatively, a reversal below support initially targets the 1400 level.

SP_500_Signals_Rebound_Ahead_as_US_Dollar_Stalls_at_Resistance_body_Picture_5.png, S&P 500 Signals Rebound Ahead as US Dollar Stalls at Resistance

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 (92.44), with a break higher implying a measured upside target at 97.90. Support stands at 87.66, the 38.2% Fibonacci retracement. A drop below that targets the 50% level at 83.76.

SP_500_Signals_Rebound_Ahead_as_US_Dollar_Stalls_at_Resistance_body_Picture_6.png, S&P 500 Signals Rebound Ahead as US Dollar Stalls at Resistance

Daily Chart - Created Using FXCM Marketscope 2.0

GOLD – Prices continue to break down as expected after putting in a Dark Cloud Cover candlestick pattern at resistance in the 1790.55-1802.80 area. Sellers have now broken past support at 1747.20, 23.6% Fibonacci retracement at, aiming to challenge 38.2% level at 1717.13 next. The 1747.20 level has been recast as resistance, with a reversal above that exposing the bottom of a broken Rising Wedge pattern now at 1766.28.

SP_500_Signals_Rebound_Ahead_as_US_Dollar_Stalls_at_Resistance_body_Picture_7.png, S&P 500 Signals Rebound Ahead as US Dollar Stalls at Resistance

Daily Chart - Created Using FXCM Marketscope 2.0

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US DOLLAR – Prices are testing critical resistance in the 9928-38 area, marked by the late August swing bottom and the top of a falling channel set from the early June high. A break higher threatens to produce a significant upward trend reversal, initially exposing 9985. Rising trend line support is at 9898, with a break below that targeting 9823.