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US Dollar Approaches 2011 High as S&P 500 Continues to Sink

Written by article default Thursday, 24 November 2011 07:47

THE TAKEAWAY – The US Dollar is approaching its year-to-date high as the S&P 500 continues to decline, stocking safe haven seeking capital inflows into the benchmark currency.

S&P 500 – Prices invalidated a bullish Inverted Hammer candlestick with a break through support at 1184.14, the 38.2% Fibonacci extension level, with sellers now aiming to challenge the 50% Fib at 1150.55. The 38.2% Fib has been recast as resistance.

US_Dollar_Approaches_2011_High_as_SP_500_Continues_to_Sink_body_Picture_5.png, US Dollar Approaches 2011 High as S&P 500 Continues to Sink

CRUDE OIL – Prices resumed downward momentum after a brief pause in the aftermath of a breakout beyond rising trend line support set from the October 4 low, aiming to test support at $94.56. A break below this boundary exposes $90.49. The rising trend line, now at $100.50, has been recast as resistance.

US_Dollar_Approaches_2011_High_as_SP_500_Continues_to_Sink_body_Picture_6.png, US Dollar Approaches 2011 High as S&P 500 Continues to Sink

GOLD – Pricesstalled ahead of resistance at 1711.13, the 23.6% Fibonacci extension level, cutting short a corrective bounce after prices cleared the bottom of a rising channel set from late September. Overall positioning continues to favor the downside, with sellers aiming for the 38.2% Fib at 1654.44. A daily close above 1711.13 is needed to neutralize the bearish bias for a more neutral tone.

US_Dollar_Approaches_2011_High_as_SP_500_Continues_to_Sink_body_Picture_7.png, US Dollar Approaches 2011 High as S&P 500 Continues to Sink

US DOLLAR – The Head and Shoulders bottom carved out between mid-October and mid-November continues to play out, with prices overcoming the 10,000 figure to exposing the year-to-date closing high at 10,084. A break above this boundary exposes the October 4 wick high at 10,134 as well as the Head and Shoulders pattern’s measured objective at 10,237. A pullback sees initial support at 9971, with a break below that targeting 9870.

US_Dollar_Approaches_2011_High_as_SP_500_Continues_to_Sink_body_Picture_8.png, US Dollar Approaches 2011 High as S&P 500 Continues to Sink

Daily Chart - Created Using FXCM Marketscope 2.0

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

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