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Dollar Corrects Lower, S&P 500 Chart Setup Warns of Downturn

Dollar Corrects Lower, S&P 500 Chart Setup Warns of Downturn

2013-08-05 04:36:00
Ilya Spivak, Head Strategist, APAC
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THE TAKEAWAY: The US Dollar corrected lower but overall positioning continues to favor the upside. S&P 500 technical positioning hints a turn lower may be ahead.

Don’t have access the Dow Jones FXCM US Dollar Index? Try the USD basket via Mirror Trader as an alternative. **

US DOLLAR TECHNICAL ANALYSIS – Prices advanced as expected after completing a bullish Flag chart pattern. A correction lower from resistance at 10899, the 38.2% Fibonacci expansion, sees initial support at 10820, the 23.6% level. A drop below this boundary eyes Flag top resistance-turned-support at 10704. Alternatively, a break above 10899 targets the 50% Fib at 10963.

Forex_Dollar_Corrects_Lower_SP_500_Chart_Setup_Warns_of_Downturn_body_Picture_5.png, Dollar Corrects Lower, S&P 500 Chart Setup Warns of Downturn

Daily Chart - Created Using FXCM Marketscope 2.0

** The Dow Jones FXCM US Dollar Index and the Mirror Trader USD basket are not the same product.

S&P 500 TECHNICAL ANALYSIS – Prices put in a Hanging Man candlestick below resistance at 1710.90, the 100% Fibonacci expansion, hinting at indecision and warning a turn lower may be ahead. . Near-term support is at 1687.40, the May 22 high, followed by the 76.4% Fib at 1675.10. Alternatively, a break above resistance aims for the 123.6% Fib at 1746.70.

Forex_Dollar_Corrects_Lower_SP_500_Chart_Setup_Warns_of_Downturn_body_Picture_6.png, Dollar Corrects Lower, S&P 500 Chart Setup Warns of Downturn

Daily Chart - Created Using FXCM Marketscope 2.0

GOLD TECHNICAL ANALYSIS Prices broke lower as expected after putting in a Bearish Engulfing candlestick pattern below resistance at the top of a rising channel set from late June. Sellers are now challenging the 14.6% Fibonacci expansion at 1301.68, with a break below that exposing the 23.6% level at 1273.98. Channel bottom support-turned-resistance is now at 1335.00.

Forex_Dollar_Corrects_Lower_SP_500_Chart_Setup_Warns_of_Downturn_body_Picture_7.png, Dollar Corrects Lower, S&P 500 Chart Setup Warns of Downturn

Daily Chart - Created Using FXCM Marketscope 2.0

CRUDE OIL TECHNICAL ANALYSIS Prices advanced as expected after putting in a Bullish Engulfing candlestick pattern. A break above initial resistance at 106.49, the 23.6% Fibonacci expansion, has exposed the 38.2% level at 108.85. A further push above that aims for the 50% Fib at 110.77. The 106.49 mark has been recast as near-term support, with a reversal back beneath that eyeing the July 30 low at 102.66.

Forex_Dollar_Corrects_Lower_SP_500_Chart_Setup_Warns_of_Downturn_body_Picture_8.png, Dollar Corrects Lower, S&P 500 Chart Setup Warns of Downturn

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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