The three assets classes featured in Sunday's post (CL, SPX, DXY) performed, at the open, in conjunction with my pre-market thesis. Oil rallied, the broad market rallied, and the US dollar rallied.
The question, now, is what will decouple to the downside and what will continue upward? In very particular order I expect Oil and US indexes to falter while the USD moves forward. Let's start with the hated "export-killing, way-to-expensive, overvalued" USD.
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| DXY Daily Chart |
Do you see (above) anything..... peculiar about price action of the USD? Something that stands out and makes you ask, "hey, I wonder why price just couldn't wait one more tic to snap upward without even touching any of those perfect-looking daily DXY support levels?"
That's exactly what I thought, and I'm giving the DXY a green light to the 98/99 level, before retesting 95, where we'll assess price action on arrival.
Regarding Oil and the broader market we need to decide if oil is leading or following.
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| Oil Daily Chart |
Following from the looks of price on the above chart; buying momentum on the SPX is greater. Although there is a support level forming (ellipse) below a resistance level (blue rectangle) I am not a buyer of oil here. In my book two resistance levels in a down-trending market beat one support level. That's not to say price can't break through, but rules are there for a reason.
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| SPX Daily Chart |
Same deal for the SPX. My read, from the above chart, says sellers have the advantage despite yesterday's strong move to the upside. I will look at longs to 2000 and 2060 if the above resistance zones are taken out but not buying into such levels during a downtrend.
Question or comment below.
Happy trading.
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