As requested by a few readers, I wanted to take a quick cross-market look at the daily charts of the US Dollar Index, Crude Oil ($WTIC), and Gold. Let’s see what may be the next major move in each of these inter-related markets.
US Dollar Index:
Let’s start with the US Dollar Index and make our assumptions from there. The Dollar Index appears to be completing a large-scale A-B-C pattern, placing us in a possible Wave 3 of (C) down currently.
Laying Elliott Wave aside, we have a possible breakdown from a Bear Flag (and EMA support) which gives a price projection target of $81 (though price could target support at the rising 200 SMA as it did briefly in December).
Without getting too much deeper in analysis than that, let us assume the next likely “swing” in the Dollar Index would be down. That would be bullish for most commodities, including…
Gold:
Though there are various Elliott Wave interpretations for Gold, if I just take the most recent swings and ‘fracalize’ them out, we get an “A-B-C” pattern down (forming a “flat”) into confluence support via the flat 200 day SMA and the 50% Fibonacci retracement of the November lows to February highs. I mentioned this was likely to be support previously and indeed it was.
Now, it seems we can count a 5-wave fractal pattern down into these lows, implying the corrective period has ended and we’re ready to begin a new impulse up, perhaps to challenge the $1,000 level again.
This view would be invalidated with a close beneath confluence support at $860 per ounce.
Crude Oil:
Finally, Crude oil appears ready for a run at new highs towards or exceeding the $55 per barrel level.
On the daily chart, price is in a confirmed uptrend (as defined by higher price highs and lows, and a positive structure for the 20 and 50 EMAs). Technically, price is in a rectangle (flat) consolidation now, but had a good day Friday, ending up almost 4%.
There has been a negative momentum divergence forming since late March which is a slight damper to oil bulls.
Keep in mind that Crude Oil has roughly traded in-line with the US Stock Market, so being bullish on Oil (and bearish the dollar) implies the S&P 500 will continue rising if the Dollar does fall as expected.
This represents a quick ‘fly-by’ analysis of these markets, so more analysis is required for any trading decisions.
Corey Rosenbloom, CMT
Afraid to Trade.com
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