Dollar Looking for Direction, S&P 500 Setup Favors Weakness

2013-03-01 07:11:00 Ilya Spivak, Head Strategist, APAC

THE TAKEAWAY: The US Dollar is in consolidation mode below a two-year high. S&P 500 technical positioning continues to favor the downside.

US DOLLAR TECHNICAL ANALYSIS– Prices are consolidating having found resistance at the top of a rising channel set from early February. Negative RSI divergence warns of weakness ahead, with a break below the channel bottom (now at 10390) initially exposing the 14.6% Fibonacci retracement support at 10367. Near-term resistance is at 10444, the February 25 high, with a move above that aiming for the channel top at 10493.

Forex_Dollar_Looking_for_Direction_SP_500_Setup_Favors_Weakness_body_Picture_5.png, Dollar Looking for Direction, S&P 500 Setup Favors Weakness

Daily Chart - Created Using FXCM Marketscope 2.0

S&P 500 TECHNICAL ANALYSIS – Prices rebounded from support at 1486.90, the 23.6% Fibonacci retracement, to recapture the 1500 figure. Near-term rising trend line support-turned-resistance is at 1535.30. A Bearish Engulfing candlestick pattern at the February 20 top remains valid however, marking the current advance as corrective in the context of a broader bearish bias absent a close above the pattern’s high (1531.60). A drop below 1486.90 exposes the 38.2% Fib at 1459.20.

Forex_Dollar_Looking_for_Direction_SP_500_Setup_Favors_Weakness_body_Picture_6.png, Dollar Looking for Direction, S&P 500 Setup Favors Weakness

Daily Chart - Created Using FXCM Marketscope 2.0

GOLD TECHNICAL ANALYSIS – Prices turned lower anew after putting in a Dark Cloud Cover candlestick pattern, taking out support at the 23.6% Fibonacci expansion at 1589.36. Sellers now target the 38.2% level at 1570.37, with a break below that exposing the intersection of the May 16 2012 close and the 61.8% Fib at 1539.35. Alternatively, a move back above 1589.36 aims for the 1600/oz figure and the February 26 high at 1620.09.

Forex_Dollar_Looking_for_Direction_SP_500_Setup_Favors_Weakness_body_Picture_7.png, Dollar Looking for Direction, S&P 500 Setup Favors Weakness

Daily Chart - Created Using FXCM Marketscope 2.0

CRUDE OIL TECHNICAL ANALYSIS– Prices are pushing lower toward support at 91.13, the 50% Fibonacci retracement. A break below that exposes the 61.8% level at 89.45. Near-term resistance is at 92.80, the 38.2 % Fib, with a reversal back above that aiming for the 23.6% retracement at 94.87.