Dollar Flat as Stocks Break Down, Commodities Set to Follow
MSCI WORLD STOCK INDEX – Prices continue to press lower having failed to penetrate resistance at $1135.85, the 50% Fibonacci retracement of the 4/15-5/25 downswing. The door is now open for a test of recent lows above the late-May bottom at $1027.59. A break beyond this juncture exposes the psychologically significant $1000 figure.
US DOLLAR INDEX – The greenback remains range-bound between the 38.2% and 26.6% Fibonacci retracements of the 4/14/2009-6/7/2010 at 85.39 and 86.66, respectively. We will look for a break of either of these levels to establish a firmer read on the near-term directional bias.
CRUDE OIL – Prices appear to have taken out support at $75.81, the 23.6% Fibonacci retracement of the 5/20-6/28 upswing, as well as cleared the bottom of a bearish Rising Wedge formation. Near-term support lines up at $73.60 and $71.81, the 38.2% and 50% Fibs, respectively.
GOLD – Positioning has been little changed over the past two days. Prices have produced a bearish Rising Wedge chart formation below $1260.00, with the downward bias reinforced by clear negative divergence on 14-day relative strength studies as well as Bearish Engulfing candlestick pattern. Confirmation of a breakdown requires a break of resistance-turned-support at $1240.00 (the mid-May top), an outcome that would open the door for a decline toward $1170.00.
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