We have seen quite a slide going on since our high posted on the 20th of March. This accelerated on the 17th of April culminating in a spike down to a low of 106.99 last Friday. We bounced back from here to close more or less where we opened giving is a Doji Candlestick. We also posted a couple of Doji's during the middle of last week which proves the point that these are not always the most reliable reversal signals. There may well be some sort of bounce but we will be still looking for opportunities to sell this market again should this happen.
Indicators in Play
A Doji is formed when the market opens and closes at or very close to the same price. These can occur at any point on a chart but are only of any significance after a prolonged rally or sell off. These are not the strongest reversal signals but do show a leveling out in the balance of power between the buyers and sellers.
Summary
There is an argument to take some profit here but overall it still looks correct to remain short. This stance would only change with a close above 108.96. The sellers will be quick to react as soon as there is any sign of this potential bounce faltering.
David has been
analyzing and trading the worlds financial markets for the past 25 years. After an initial grounding with Mercury Asset Management and Warburg Securities he went on to set up his own brokerage operation in London. Since then he has appeared regularly on Bloomberg Television and been involved in providing analytics on behalf of some of the worlds major exchanges. He is also a member of the Society of Technical Analysts.
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