Daily Dollar Doji Sell Signal Feb 9

Feb 9, 2010: 5:57 PM CST

After completing a perfect bull flag (in pure text-book 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 sell-off 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/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.

For prior updates, and to follow the analysis as it unfolded in real-time, see the following updates:

January 18: “Bull-Flag Forms in the US Dollar Index”

January 27:A Bump in the Road in the Dollar Index Bull Flag?

Feb 4: “A Quick Quad-Market Assessment of the Thursday Sell-off”

Corey Rosenbloom, CMT
Afraid to Trade

Follow Corey on Twitter:  http://twitter.com/afraidtotrade

7 Comments

7 Responses to “Daily Dollar Doji Sell Signal Feb 9”

  1. clandersen Says:

    As for the “unexpected resistance” on the dollar – it actually ran into the middle B-Band on a Monthly chart at 80.43 and the 50 month MA at 80.91so it's really not that surprising it stalled here.

  2. chomen Says:

    More likely: it's “half-way” doji, indicating the dollar has another leg up.

  3. Diggy | Forexhabits.com Says:

    Hey Corey,
    I agree with you, it seems like the usd index needs to correct a little bit. Eur/Usd needs to go up again (I'd say up to maybe 1.41.)

    I think it is merely a correction and not the start of a new trend but we will see how it unfolds.
    Cheers!
    Diggy

  4. Thankful_Reader Says:

    Thanks for the charts, makes my life much easier, S

  5. Diggy | Forexhabits.com Says:

    Hey Corey,
    I agree with you, it seems like the usd index needs to correct a little bit. Eur/Usd needs to go up again (I'd say up to maybe 1.41.)

    I think it is merely a correction and not the start of a new trend but we will see how it unfolds.
    Cheers!
    Diggy

  6. Thankful_Reader Says:

    Thanks for the charts, makes my life much easier, S

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