Double Doji – Should Resolve with Larger Move

Jun 11, 2008: 8:58 AM CST

Interestingly enough, the S&P 500 Index formed two doji candlesticks over the last two sessions, revealing a market experiencing indecision, which should give way to a larger trend move today or soon, so be expecting some sort of range expansion day.

Beyond the two doji ‘indecision’ candles, we have a negative momentum divergence, and a new roughly confirmed downtrend (lower high and lower low and confirmation) on the daily chart, and price is beneath all key moving averages.

I would wager odds favored lower prices, and a potential retest of the 1,280 lows before long.  Volume also rose on the days of indecision, which indicates churning and a potential struggle between buyers and sellers.  Eventually, one side will lose the temporary battle and price should expand into a range expantion, or possible trend-style day.

The Dow Jones looks even worse from a bullish standpoint:

It looks more bearish from a trend standpoint, but price found significant resistance at the converging 20 and 50 period moving averages, and the negative momentum indicator is more ominous than that of the S&P.

The NASDAQ (not shown) managed to underperform, and carve out two negative days previously.

Be prepared for potential price expansion either today or at some point going into the weekend.  It’s very interesting to have two dojis back-to-back.

1 Comment

One Response to “Double Doji – Should Resolve with Larger Move”

  1. Stock Kevin Says:

    Do you know what ended up happening after that doji?