US Dollar Pullback, S&P 500 Recovery Hinted in Technical Positioning

DailyFX   |  May 7 2012 9:06 EDT

The US Dollar may pull back while the S&P 500 recovers as technical positioning points to indecision, hinting momentum behind recent moves is fading.

THE TAKEAWAY: The US Dollar may pull back while the S&P 500 recovers as technical positioning points to indecision, hinting momentum behind recent moves is fading.

S&P 500 – Prices put in a Hammer candlestick above support at 1363.50, the 76.4% Fibonacci expansion, hinting a bounce may be ahead. Initial resistance lines up at 1392.10. Alternatively, a push through support exposes the 1339.40-1347.40 area, marked by the 100% Fib expansion as well as the 38.2% retracement of the rally from the December 19 2011 swing low.

Daily Chart - Created Using FXCM Marketscope 2.0

CRUDE OIL – The selloff marked by a Harami candlestick pattern identified last week found interim support in the 95.78-96.56 area marked by a horizontal barrier in play since early November 2011 as well as the 100% Fibonacci expansion. A hammer candlestick hints that a bounce may be ahead. Initial support lines up at 98.89, the 76.4% expansion, with a break above that exposing the 61.8% level at 100.33. Alternatively, a push through support targets 92.51.

Daily Chart - Created Using FXCM Marketscope 2.0

GOLD – Prices are testing support in the 1630.00-1637.73 area marked by the bottom of a Triangle chart formation carved out since late March and the 23.6% Fibonacci expansion. The Triangle setup is typically indicative of continuation, which in this case carries bearish implications. A break through support initially exposes the 38.2% expansion at 1611.79. Triangle top resistance is now at 1661.75.

Daily Chart - Created Using FXCM Marketscope 2.0

US DOLLAR – Prices put in a Shooting Star candle below resistance at a falling trend line established from mid-March, hinting a pullback may be ahead. Initial support is at 9906, with a break below that exposing 9875. Trend line resistance is now at 9970.

Daily Chart - Created Using FXCM Marketscope 2.0

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

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