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Crude Oil & the Dollar Print
Written by Site admin   
Sunday, 29 January 2017 19:44

Crude Oil and the US Dollar have a long term correlation, it's inverse, so as the Dollar goes up, Oil goes down.

Since Trumps election we've had a break out and bull run in the Dollar and, if as seems likely, there will be a series of US interest rate rises this year, there's more strength to come. So, if the correlation is inverse and the Dollar rises, Crude Oil should fall, right?

WTIDXYJan17

On this chart I inverted the DXY, in red, so withe the correlation they should both be running in the same direction. Problem is, the correlation broke last May. Since then they've moved opposite the long term correlation and have, this month, started to converge again. As the arrows there should be much more of this to come. Either Crude falls or the Dollar strengthens.

 

From the blog

Range bound EURGBP

Stuck in a loop &

Range bound

Dear Trader and Clickevents reader

As we all await release from lockdown, our enforced daily routines are tending to merge into a Groundhog Day world.

Socialising has become distancing, with WhatsApp the vital connection to our extended families. We've adjusted to taking virtual afternoon tea and barbecues with friends on Zoom and have amassed so many films and series to watch on DVDs and downloads we are starting to hope lockdown doesn't end too soon!

It's been quite a lesson in adjusting to changing circumstances and that should be no great difficulty for traders. Market dynamics never stay the same for long, morphing from one stage to the next.

Massive trends

As virus realty took hold, the Dow Jones collapsed into a rampant down trend, losing over 5,000 points in three weeks.

Then the Oil debacle between the Saudis and Russia was preceded by the collapse in demand as countries closed borders and trade.

These massive moves in oil and stock markets have been partially rescued by Trump's printing press, but many of the  currencies have stalled.

Since late March many of the currency pair charts are showing a distinct change from deeply trending to range bound.

The EURGBP is typical of these.

Read more...

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