High oil, low dow, low USD
Lately the price of oil has been skyrocketing, reaching new highs every week the past few weeks. With $135 hit last week, all the news keeps talking about is high gas prices and how that affects the average American citizen. The past 2 weeks every time oil started surging up, the dow would start dropping, dragging the JPY pairs with it. For my JPY trades I regularly watch the dow futures chart, but now I find myself also watching oil and also gold prices. When JPY and dow are correlated and gold and EUR and oil are correlated, it certainly helps with picking trades and picking the right direction to trade! Today was the first trading day after the Memorial Day holiday, so I was not sure if price action would move in one direction or continue to range. Most currency pairs did range again today, and I did not make too many pips. But it is interesting to watch how oil dropped in price by about $4 from last week, as did gold prices drop today. As those two commodities started dropping, then the USD regained some strength. Many “experts” have been expecting USD to strengthen again, so I keep watching the charts for any signs of this. Maybe today was the beginning of such a reversal, it is pretty early yet to tell. How can we tell if USD will continue to strengthen? I will be looking specifically at EURUSD pair, for continued down moves after making a lower high just two days ago. I will also we watching AUDUSD for similar reaction. IF USD can begin to strengthen then I would also expect to see the dow index strengthen too… which would mean good time to continue buying the JPY pairs up. Of course, there is another option rather than a reversal in USD or continued weakness: ranging. Good trading..