USD index reverses on weekly doji candle

USD index - daily chart
USD index – daily chart

As we come to the end of another trading week, I just want to return to the USD index, following my post earlier this week in which I suggested that the index was likely to reverse, based on the doji candle on the weekly chart.  The reversal has duly arrived, first signalled in yesterday’s trading session with a bearish engulfing candle which broke below the 10800 price level, and this negative sentiment towards the dollar has continued overnight, and into this morning’s session, with the index now trading at 10739.66 (at time of writing).

Should the price continue to hold in this region for the remainder of the day, then the interim platform of support in the 10760 will have been breached, and we may see a consequent move lower next week.  The bearish engulfing pattern of Wednesday and Thursday can also be considered as a two bar reversal, and when superimposed delivers a classic shooting star candle, one of the most powerful trading signals.

Moving forward, for any deeper move we now have a very solid platform of support in place as shown on our volume at price histogram and defined by the green and blue lines. This should provide the platform to prevent any further sell off in the US dollar, but if the lower level is broken, in the longer term, in the 10400 area, then this will signal structural weakness in the US dollar.

By Anna Coulling

About Anna 1067 Articles
Hi – my name is Anna Coulling and I am a full time currency, commodities and equities trader. I have been involved in both trading and investing for over fifteen years and have traded many different financial instruments, from options and futures to stocks and commodities. I write and publish articles ( mostly for free ) for UK and international publications on a wide variety of financial issues, and in particular I enjoy helping others learn how to invest and trade.

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