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S&P 500 Cautiously Hints at Rebound, Suggesting Dollar Rally May Stall
Written by article default Friday, 25 November 2011 07:50
THE TAKEAWAY – S&P 500 technical positioning is cautiously hinting a corrective rebound may materialize into the week-end, threatening a pause in the US Dollar’s advance.
S&P 500 – Prices are testing support at 1150.55, the 50% Fibonacci extension level, with a break lower exposing the 61.8% boundary at 1116.96. However, an Inverted Hammer candlestick points to indecision and warns that an upswing may be ahead, although it is unclear whether the candle occurred because of genuine doubt in the bearish argument or because of the proximity of the Thanksgiving holiday. In any case, a close below 1150.55 would neutralize the bullish threat, whereas a bounce would see resistance marked at the 38.2% Fib level (1184.14).
CRUDE OIL – Crude oil continues to tread water above 94.56 but the overall bias remains bearish as long as prices remain below former support at a rising trend line set from early October lows, now at 101.48. A break below near-term support exposes 90.49.
GOLD – Pricescontinue to stall below resistance at 1711.13, the 23.6% Fibonacci extension level, a barrier reinforced by former support at the underside of a rising channel set from late September. Overall positioning favors the downside, with sellers aiming to challenge the 38.2% Fib at 1654.44.
US DOLLAR – The aftermath of the Head and Shoulders bottom carved out between mid-October and mid-November continues to play out, with prices en route to challenge 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.
Daily Chart - Created Using FXCM Marketscope 2.0
--- Written by Ilya Spivak, Currency Strategist for Dailyfx.com
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