Daily Dollar Doji Sell Signal Feb 9
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
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.
More likely: it's “half-way” doji, indicating the dollar has another leg up.
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
Thanks for the charts, makes my life much easier, S
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
Thanks for the charts, makes my life much easier, S