The EURO/US$ posted a Doji last Wednesday followed by two very strong sessions on Thursday and Friday. Today we are once again above our old Marabuzo line from the 24th of April at 157.89 and which side of this point we finish the day will be very important for this market. If we can hold above here for the close then a test of 160.20 is very much on the cards. It all looks very positive as we stand but a slip back below this line by the end of the day will mean the probability of staying within the recent range is very high.
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.
A Marabuzo line is the 50% point between the open and close on a large range day where these two points are at or close to the days extremes.
Summary
Things are looking very hopeful here but if this is really the case then we should have no problem closing above 157.89 today. A failure to do this would raise questions again and would probably see the Bears re emerge.
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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