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US Dollar Stuck in Familiar Range, SPX 500 Appears Vulnerable

US Dollar Stuck in Familiar Range, SPX 500 Appears Vulnerable

2014-03-05 07:26:00
Ilya Spivak, Head Strategist, APAC
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Talking Points:

  • US Dollar Struggling to Find Direction in a Familiar Range
  • S&P 500 Looks Vulnerable After Setting Another Record High
  • Crude Oil, Gold Prices Remain at Risk of a Bearish Reversal

Can’t access to the Dow Jones FXCM US Dollar Index? Try the USD basket on Mirror Trader. **

US DOLLAR TECHNICAL ANALYSISPrices are still struggling to find direction, with trading locked in a narrow consolidation range above support at a rising trend line set from September 2012. A break above resistance at 10614, the 23.6% Fibonacci expansion, initially exposes the 38.2% level at 10673. Trend line support is now at 10559, with a reversal below that eyeing the February 17 low at 10520.

Forex_US_Dollar_Stuck_in_Familiar_Range_SPX_500_Appears_Vulnerable_body_Picture_5.png, US Dollar Stuck in Familiar Range, SPX 500 Appears Vulnerable

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 ANALYSISPrices recovered above the 23.6% Fibonacci expansion at 1863.60 to test rising channel top resistance at 1879.40. This barrier is reinforced by the 38.2% level at 1881.30. A break above the latter boundary exposes the 50% Fib at 1895.70. Emerging negative RSI divergence warns of ebbing bullish momentum and hints a turn lower may be ahead however. Sliding back below 1863.60 opens the door for another test of the channel floor, now at 1847.40.

Forex_US_Dollar_Stuck_in_Familiar_Range_SPX_500_Appears_Vulnerable_body_Picture_6.png, US Dollar Stuck in Familiar Range, SPX 500 Appears Vulnerable

Daily Chart - Created Using FXCM Marketscope 2.0

GOLD TECHNICAL ANALYSIS – Prices put in a bearish Dark Cloud Cover candlestick pattern below resistance at a falling trend line set from April 2013, hinting a turn lower may be ahead. Negative RSI divergence bolsters the case for a downside scenario. Breaking below the 23.6% Fibonacci retracement at 1313.14 exposes the 38.2% level at 1287.48. Trend line resistance is now at 1356.08.

Forex_US_Dollar_Stuck_in_Familiar_Range_SPX_500_Appears_Vulnerable_body_Picture_7.png, US Dollar Stuck in Familiar Range, SPX 500 Appears Vulnerable

Daily Chart - Created Using FXCM Marketscope 2.0

CRUDE OIL TECHNICAL ANALYSIS – Prices put in a bearish Dark Cloud Cover candlestick pattern, warning a downturn may be around the corner. As with gold, negative RSI divergence reinforces the likelihood of a reversal lower. Breaking rising trend line support at 102.82 targets the 23.6% Fibonacci retracement at 101.89, followed by the December 27 high at 100.73. Near-term resistance is at 105.19, the March 3 high.

Forex_US_Dollar_Stuck_in_Familiar_Range_SPX_500_Appears_Vulnerable_body_Picture_8.png, US Dollar Stuck in Familiar Range, SPX 500 Appears Vulnerable

Daily Chart - Created Using FXCM Marketscope 2.0

--- Written by Ilya Spivak, Currency Strategist for DailyFX.com

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