Bill Baruch, president and founder of Blue Line Futures, reviews and previews the euro, Japanese yen...
Sell Signal Presented on US Dollar Daily Chart
02/11/2010 12:01 am EST
After completing a perfect bull flag (in a pure textbook example) as expected, the US dollar index is now forming a bearish sell signal at the target of $80.50, which is worth our attention.
Pardon the purposeful alliteration, but let’s look at the daily dollar doji sell signal:
The Bull flag target has long been the $80.50 level, and now we’re seeing a short-term sell signal in the form of a doji candle at the upper Bollinger band on the daily chart.
To make matters worse (or, to confirm the signal), today formed a strong bearish selloff, which now places the candle formation to resemble an “evening doji star” three-candle pattern.
It’s often the case to see price find unexpected resistance (meaning there are no moving averages or Fibonacci retracements there) at a price pattern (bull flag) projection target.
That makes sense. If a bull flag had an unlimited target, investors or traders would keep holding long instead of taking their profits at the expected target (sometimes creating via self-fulfilling prophesy the down move expected).
Whatever the case, it’s worth noting that the dollar is likely in a sell swing short-term that could take price to challenge $79.00 or lower.
By Corey Rosenbloom of AfraidToTrade.com
Related Articles on FOREX
This is a market that isn’t impressed with talking but will pay attention to rates and oil. So...
The USD focus is on rates being higher and it’s just not mattering like it did earlier this ye...
The running of the bulls in equities (SPX) grabs headlines overnight with China up 2.5% leading the ...