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S&P 500 Still Looks Oversold, Leaving US Dollar Vulnerable
Written by article default Thursday, 11 August 2011 08:51
THE TAKEAWAY – The US Dollar is vulnerable to pullbacks as S&P 500 positioning remains oversold, warning of a bounce in risk appetite that weighs on the safe-haven currency.
S&P 500 – Prices continue to consolidate in a very volatile range below the 1183.95, the 38.2% Fibonacci retracement level. RSI readings are cautiously recovering from deeply oversold conditions and very early signs of positive divergence have started to emerge, arguing for a deeper correction ahead. The 1183.95 mark remains as near-term resistance, with a break higher exposing the 50% level at 1215.99. Initial support stands at 1116.30 (the 8/8 close), followed by 1080.23 (the 8/9 wick low).
CRUDE OIL – Prices continue to stall near support at $81.57, the intersection of the 23.6% Fibonacci retracement level reinforced by the lower boundary of a falling channel set from the May swing high. As with the S&P 500, RSI studies are creeping out of oversold territory and early signs of positive divergence have emerged, bolstering the case for a corrective rebound. Initial resistance stands at $85.21, the 38.2% Fib.
GOLD – Prices are showing signs of fading strength below the $1800 figure, with RSI studies in heavily overbought territory and revealing the beginnings of negative RSI divergence. Initial support stands at 1773.26, the 23.6% Fibonacci retracement level, but the key level to watch is the 50% Fib at 1727.15, a boundary that coincides with resistance-turned-support at a rising channel top. Through here would help neutralize immediate upside pressure for a more neutral tone.
US DOLLAR – The greenback continues to mirror the aggressively volatile consolidation of the S&P 500. A falling trend line connecting major highs from late May and horizontal support at 9508 frame price action. Signs of a larger rebound in share prices point to a parallel pullback in the US currency, with a break below 9508 exposing 9457.
Created Using FXCM Marketscope 2.0
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