Swing Trading Strategies & Stock Picks Since 2003

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