I know I know, a 1% up-move in the dollar index and people are getting all dollar bullish again. Our job here is to look for clues and remain impartial and vigilant as we meander through this jungle calle the market. One of the clues I tend to look for are key reversal signals using candlestick analysis.
The two currency pairs to the dollar that I watch most closely are the EUR/USD and the USD/CHF.
Starting off with the EUR/USD. The previous five days before today were all so called Doji or 'indecision' candles, meaning investors reached a temporary point of equilibrium where neither bulls nor bears had the upper hand. A string of such days most often leads to strong moves in either direction. In this case it was lower, as is evident by today's big selloff in this currency pair. Such patterns often also put in at least an intermediate high/low, as may be the case here. Next major support here is at 1.45.
The Swiss Franc has been a cross between a safeheaven currency and some sort of immorrtal beast as of late. Today however marks a day to perk up and out of the chair a and take a whiff of a potential trend change. Note the Doji candle yesterday, followed by today's rally. Just like in the EUR/USD chart, this is a first indication at a potentially more longer lasting USD rally.
