The dollar is now in its third consecutive day of trading lower. The dollar hit its highest value of 107.05 on Tuesday, October 3. This is the highest value of the index and almost a year. The last time the dollar index was at 107 occurred at the end of November 2022. On Tuesday when the dollar index hit its highest value of this current rally which began in July after trading from a low just above 99. The daily candlestick that occurred was a” doji” .
This single candlestick occurs when neither the bullish nor bearish faction can dominate the market resulting in an open and closing price that are the same. While it can be simply an indication of market consolidation in its best-case scenario it can reveal a moment in time when momentum shifts and a pivot or key reversal occurs.
In his book, “The Japanese Chart of Charts”, Seiki Shimizu identifies five types of doji candlesticks based on the location of the real body as well as the length of the wick. The five types are long-legged, dragonfly, gravestone, four-price, and tonbo. Seiki Shimizu's book was the first book on the Eastern art of technical analysis translated into English in 1986.
While multiple Western technical indicators have concluded that gold pricing is oversold. Eastern and Western technical exhaustion patterns were discussed in yesterday’s article but with today’s price advance, gold seems to hold a lot more weight.