The Dollar index has been on a steady decline since mid-February and is currently one of the least loved asset. While price has drifted lower, the momentum readings have not matched the price lows.
Dollar Index - Daily Charts
If we went back to the 7th Feb blog post on the Dollar Index (from where there was a small bounce), the Index is trading SLIGTHLY below that medium term trendline. All these line up well for a bear trap. If the currency basket closes above 77.25, I will be brave to venture a long here.
It is also time to have a look at the charts of crude given the amount coverage it has been getting over the last few weeks.
Crude - Daily Charts
While there are no visible signs of exhaustion or reversal here, there are some early warning signs. The volume for these contracts has been dropping over the last few days. If we have a higher close for one or two sessions and then a mild/sharp sell off day, one of my synthetic indicators is likely to flash a sell signal at least for the short-term. The most important signal, I see here is that there is hardly anyone who is NOT BULLISH or does not expect $150-$200 crude. In fact, one famous author of a commodities book, who had been bearish on many commodities including crude is expecting $200 crude now!!!! Let me warn you here. I'm not trying to say it is time to short crude here. In fact,It is suicidal to out guess the market. A good trade practice is to be prepared around important pressure points, wait for the reversal and if we have one, evaluate the risk-reward and then pull trigger.
12 Responses to “Dollar Index and Crude”
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hi sir as dollar index is 77.43 i think as per your view you are long from here
That’s right Zubair. My risk profile could be much different from yours – so before you act on these, I suggest you understand your risk profile and talk to a registered investment advisor.
Best regards,
Jai
sir i am not investing more emphasize to gain knowledge
sir whats your target on crude on down side
More like a price objective rather than a target – $92-94 on Nymex crude.
thank you for your reply sir
sir once you said me that be with the trend until it has reversed.but if we be in it until it has reversed some profits will be missed.thanks for your reply in advance
i mean till when i am finding that trend is reversed .some profits are missing
There is no single method or technique that will let you nail the exact bottom or exact top. At the very best, one can catch the entry or exit, one bar after the low or high has been established – and to do that regularly is very close impossible. The idea of staying with the trend is not to catch the exact top or bottom but to make maximum profits while taking minimum risk. Read reminiscence of a stock operator.
Best,
Jai
thank you sir.always very kind and positive replies
Hi jai: Trust you are doing good. Can you provide a option tip to make money pl. Rgds
Hi Sridhar,
The information in this blog is aimed to serve the purpose – teach a man to fish 🙂 You have to arrive at your own trading decision with the analysis here.
Good luck with your trading,
Jai.