Dollar Rally Takes a Break, S&P 500 Threatens Bearish Setup

THE TAKEAWAY: The US Dollar is aiming to set another three-year high while recent S&P 500 gains continue to look corrective in the context of a larger decline.

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US DOLLAR TECHNICAL ANALYSIS – Prices broke above resistance at 10946, the 100% Fibonacci expansion, opening the door for a move higher to challenge the 123.6% level at 11016. The 10946 mark has been recast as near-term support. A reversal back beneath that aims for the 10848-77 area marking the late-May swing top.

Forex_Dollar_Rally_Takes_a_Break_SP_500_Threatens_Bearish_Setup_body_Picture_5.png, Dollar Rally Takes a Break, S&P 500 Threatens Bearish Setup

Daily Chart - Created Using FXCM Marketscope 2.0

S&P 500 TECHNICAL ANALYSIS – Prices moved higher as expected after putting in a bullish Piercing Line candlestick pattern. A move above the 61.8% Fibonacci retracement at 1638.40 has exposed support-turned-resistance at a rising trend line set from mid-November 2012, now at 1645.30. A further push above that aims for the 76.4% level at 1657.10. Alternatively, a move back beneath 1638.40 targets the 50% mark at 1623.30.

Forex_Dollar_Rally_Takes_a_Break_SP_500_Threatens_Bearish_Setup_body_Picture_6.png, Dollar Rally Takes a Break, S&P 500 Threatens Bearish Setup

Daily Chart - Created Using FXCM Marketscope 2.0

GOLD TECHNICAL ANALYSIS – Prices turned lower anew, with sellers challenging support marked by the 23.6% Fibonacci expansion at 1209.88. A break beneath that initially targets the 38.2% level at 1174.32. Near-term resistance is at 1267.36, the July 2 swing high.

Forex_Dollar_Rally_Takes_a_Break_SP_500_Threatens_Bearish_Setup_body_Picture_7.png, Dollar Rally Takes a Break, S&P 500 Threatens Bearish Setup

Daily Chart - Created Using FXCM Marketscope 2.0

CRUDE OIL TECHNICAL ANALYSIS– Prices advanced as expected after putting in a bullish Piercing Line candlestick pattern above trend line support. A break above the 78.6% Fibonacci expansion at 103.35 would expose the 100% level at 106.26. Near-term support is at 101.07, the 61.8% Fib, with a break beneath that eyeing the 50% expansion at 99.47.

Forex_Dollar_Rally_Takes_a_Break_SP_500_Threatens_Bearish_Setup_body_Picture_8.png, Dollar Rally Takes a Break, S&P 500 Threatens Bearish Setup

Daily Chart - Created Using FXCM Marketscope 2.0

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

To contact Ilya, e-mail ispivak@dailyfx.com. Follow Ilya on Twitter at @IlyaSpivak

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