THE TAKEAWAY: The US Dollar may correct downward before the resuming a larger advance. The S&P 500 has met initial technical support after snapping its near-term uptrend.

US DOLLAR TECHNICAL ANALYSIS– Prices pushed above the 61.8% Fibonacci expansion at 10358, exposing the 76.4% level at 10505. A Shooting Star candlestick warns a near-term pullback may occur before the rally resumes. The 10358 level has been recast as near-term support, with a turn back below that aiming for a rising trend line set from early February, now at 10346.

Forex_Dollar_May_Pull_Back_Before_Rally_Resumes_SP_500_at_Support_body_Picture_5.png, Dollar May Pull Back Before Rally Resumes, S&P 500 at Support

Daily Chart - Created Using FXCM Marketscope 2.0

S&P 500 TECHNICAL ANALYSIS – Prices broke rising trend line support set from early January, completing a Bearish Engulfing candlestick formation. Initial support from here lines up at 1497.40, the 23.6% Fibonacci retracement. A drop below that targets the 38.2% level at 1476.90. The trend line – now at 1524.20 – has been recast as resistance, with a rebound back above that eyeing the February 20 high at 1531.60.

Forex_Dollar_May_Pull_Back_Before_Rally_Resumes_SP_500_at_Support_body_Picture_6.png, Dollar May Pull Back Before Rally Resumes, S&P 500 at Support

Daily Chart - Created Using FXCM Marketscope 2.0

GOLD TECHNICAL ANALYSIS – Prices bounced to retest support-turned-resistance at the bottom of a falling channel set from October, a barrier reinforced by the 23.6% Fibonacci retracement at 1588.61. A break above that targets the 38.2% level at 1609.40. Near-term support is at 1555.00 – the February 21 low – with a turn back beneath that targeting the May 16 2012 close at 1539.35.

Forex_Dollar_May_Pull_Back_Before_Rally_Resumes_SP_500_at_Support_body_Picture_7.png, Dollar May Pull Back Before Rally Resumes, S&P 500 at Support

Daily Chart - Created Using FXCM Marketscope 2.0

CRUDE OIL TECHNICAL ANALYSIS– Prices broke below support at 93.24, the 38.2% Fibonacci retracement, exposing the 50% level at 91.70. A further break beneath that aims for the 61.8% Fib at 90.16. The 93.24 mark has been recast as near-term resistance, with a turn back above that eyeing the 23.6% retracement at 95.14.

Forex_Dollar_May_Pull_Back_Before_Rally_Resumes_SP_500_at_Support_body_Picture_8.png, Dollar May Pull Back Before Rally Resumes, S&P 500 at Support

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

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