S&P 500 Chart Setup Warns Prices May Not Hold Onto 1400 Level

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By Ilya Spivak, Currency Strategist 16 March 2012 03:55 GMT THE TAKEAWAY: S&P 500 technical positioning suggests a bearish reversal may be brewing, hinting the index may be unable to keep hold on the 1400 figure.

S&P 500 – Prices appear to be carving out bearish Rising Wedge chart pattern (albeit a bit of an awkward-looking one). Negative RSI divergence bolsters the case for a brewing downward reversal. Initial support lines up at in the 1382.80-1377.10 area, with a break below that exposing 1358.90. Wedge top resistance lines up at 1407 figure. Alternatively, a break higher exposes 1425.40, the May 2008 closing high.

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CRUDE OIL – Prices put in a Hammer candlestick above support at 104.38, the 38.2% Fibonacci retracement, hinting an upswing may be ahead. Prices also appear to be showing the beginnings of a Falling Wedge chart pattern – a setup indicative of a bullish reversal – although confirmation is absent for now. Near-term resistance lines up at 106.50, with a break above that exposing 107.81.

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GOLD – Prices put in a Harami candlestick above support at 1638.84, hinting a bounce may be ahead. Initial resistance lines up in the 1666.37-1677.05 area, with a break above that exposing the 1700/oz figure and 1718.05. Alternatively, a break lower targets the 1600/oz handle.

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US DOLLAR – Prices put in a bearish Dark Cloud Cover candlestick pattern below resistance at 10072, the 61.8% Fibonacci expansion. A pullback sees initial support at 9995, the 50% Fib, a barrier reinforced by former resistance at the top of a minor rising channel. Alternatively, renewed upward momentum through the 61.8% level exposes the October 4 top at 10134, followed by the 76.4% expansion at 10166.

Daily Chart - Created Using FXCM Marketscope 2.0

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

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16 March 2012 03:55 GMT

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