inflection point This study is not complete, and it is not intended to be yard art, but I lack the tools on my TV to better illustrate for now. These few days should demonstrate the idea.
While looking at the ytd overlay of wti to Dxy, I found that the overall pattern in sync with wti. When reviewed at 15min I could see a direct corresponding pattern in wti & dxy. I did not look for % of move or overall movement range, but rather corresponding inflection points and direction. The chart clearly shows those matching inflections occurred in DXY about 10min before WTI.
This is not to say that dxy and wti track or mirror.. they both have their own future. I does tell me if I will see an inflection on next 15 min candle in WTI.... I think ? I doesn't say size of inflection, but in general .05 changes in DXY with pronounce marked change in wti. ( 10 min early)
I wish there was a tool to better illustrate.. I'm sure there is, I'm just old & slow. I will track and update... good luck
Komen
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- Here is the overnight.. you can see the shif in lead time. From 4 hrs to 1hr overnight. I wonder if less hands on oil (us market closed), makes pushing the rope more efficient?
My observation is, there is both an immediate and delayed reaction on wti at dxy inflection. This delayed effect changes in timing. Will update as observed.
Komen
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- Last one.. for now. Maybe go quiet, track, and incorporate into daily. Plus I need to find a better tool on TV to mark overlays.. I have limited scaling control on overly (dxy). But last target forecast shows merit. Thanks all
Interesting, but don't see much use on such small time intervals. What is your analysis on the 1D ?
BigEz
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@purpurato59,
Not done daily overall, at first look it is too low a resolution.. if events happen 1 to 4 hours later, anything below an 1hr chart is hard to identify timing. But I'm just starting.. :) Will need a few days to see. But I can tell you now that direction, spread or coorolation with WTI is not consistent, but inflection events seem to be.
My goal would be to have infection indicator. Knowing an event is going to happen in X hrs gives me an edge... maybe?
purpurato59
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@BigEz, I once used the gold/oil ratio and I think there was something to dig in. That ratio works best on higher time intervals, but I think correlation was not so strong as with DXY.
Oh_If_Only
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Hello BigEz
Interesting study.
The "101" book says that normally commodities (oil, grains, gold etc) and currency (USD) share an inverse relationship.
They each have their own cycles and are subject to externalities but the negative beta is the "norm".
This is evident in your work. Notice when DXY falls your inflection pts stretch longer to the right, then "straighten" as DXY starts to rise.
This is the elasticity of that beta relationship, IMO. But, like the planets, which is pulling on which as it is not a constant.
But I believe you have stumbled on the fact that generally US futures markets are non-deliverable to the foreigners and hedge funds, but they do use them to hedge and speculate and for that, they need US. So if I am a Cotton Merchant I want to Sell Cotton futures and sell USD to receive benefit in my local currency.
Perhaps a PHD technician could see whether there is a timing difference (ie mis-match on contract vs currency fwd month), which you may be viewing.
If there is an arbitrage opportunity, sshhhh!!! , coz "they" will find , exploit and shut it!
I also think I read elsewhere that someone was looking at a correlation between CU and WTI.
... and to continue your maritime analogy, rising tide lifts all boats! So in the near term watch DXY for a ST view on commodities in general.
big +10 for your effort and thinking outside the box.
... and for the record I am ST bearish but LT bullish on WTI, ST and LT bearish Au & Ag.
I am going to look at your observation on the compression, elasticity you observed. There was a big shift in overnight as well.
Thanks , and yes as to out the box, I only trade oil (use to trade stock) and I'm by no means a traditional trader. I mainly trade trend channels and cycles (as I interpret them). I'm a dyslectic Engineer who tends to see thing a little differently.. of course I have a grasp on traditional TA, but I'm not constrained by TA alone. In any case, thanks for the validation of a maybe, kinda idea? I will also look at CU timing as well.
Or maybe I need to hire a young PHD student to run my crazy ideas? Lol