By Ilya Spivak, Currency Strategist
THE TAKEAWAY – The US Dollar broke initial resistance to open the door for further gains as the S&P 500 continued to build a top, promising safe-haven demand for the greenback.
S&P 500 – Prices put in a Bearish Engulfing candlestick pattern below rising trend support-turned-resistance in place since mid-October, hinting a reversal lower is ahead. Initial support lines up at 1225.71, the 23.6% Fibonacci extension level, with a break lower exposing the 38.2% barrier at 1184.14. Trend line resistance is now at 1278.90.
Daily Chart - Created Using FXCM Marketscope 2.0
CRUDE OIL – Prices are testing rising trend line support set from late October, with a break lower exposing 94.58. Near-term resistance is found at 101.80, but only a daily close above 103.35 negates the overall downside bias established by a Bearish Engulfing candlestick pattern completed on November 17.
Daily Chart - Created Using FXCM Marketscope 2.0
GOLD – Prices broke through the rising trend line set from late September as well as horizontal resistance-turned-support at 1680.55, exposing the next downside target at 1609.05. The 1680.55 level has been recast as near-term resistance.
Daily Chart - Created Using FXCM Marketscope 2.0
US DOLLAR – Prices broke through the 14.6% Fibonacci extension at 9927 having put in a Bullish Engulfing candlestick above resistance-turned-support at 9823, a former Head and Shoulders bottom neckline. The bulls now challenge the 23.6% level at 9982, with a break above that exposing the 38.2% Fib at 10074. Longer term, the implied Head and Shoulders bottom target is at 10237. The 14.6% extension has been recast as near-term support.
Daily Chart - Created Using FXCM Marketscope 2.0
--- Written by Ilya Spivak, Currency Strategist for Dailyfx.com
Courtesy:DailyFX
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