Euro/Dollar Spotlight: Indicator of the Day

[I][B]The Euro has rallied quite impressively thus far after initially breaking down to fresh 2009 lows by 1.2455 overnight. The pair now trades back near opening levels with a close by 1.2560 to set up a bullish reversal signal in the form of a “dragonfly doji” candle formation.

A "dragonfly doji" is a candle setup that occurs at the end of trend and often results in some form of a bottom. For this set-up to occur, the market will trade significantly lower right from the open, before eventually recovering to close all the way back by opening levels. From a price action perspective, this translates into a market that wanted to continue in the direction of the trend but in the end, could not succeed in its attempts. The picture above is a snapshot of the daily Euro chart taken into the US open. While we still have a lot of trade to go before the daily close at 5pm EST, we thought that the potential set-up was worth highlighting, even if for educational purposes. However, should we close at or near 1.2560, we most definitely will be looking for some upside into Thursday Friday.

Written by Joel Kruger, Technical Currency Analyst for
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“Tech Talk” – A Daily Video Highlighting Technical Developments in the Overnight Session of Trade.
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“Indicator of the Day”A Feature Report that Highlights our Most Significant Technical Indicator of the Day.
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“Cross Country” – A Midday Fundamental Update, along with Technical Analysis of Selected Cross Rates.
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