The Dollar and Oil

Remember, when we talk about the dollar, you have to keep in mind that it tends to have a strong correlation with oil, the market and certain commodities. Since oil is sold in $USD, any drop in the dollar makes oil cheaper so to compensate, oil prices rise. The same is true to a lesser degree, but still a pretty strong correlation with the market.

So lets look at UUP which is an ETF I use as a proxy for the dollar since dollar data isn't useful in 3C intraday charts.

While my long term outlook on the dollar is still fairly bullish, in the mid-term, we see the last two days (thus far) not making any forward progress off the open and volume is relatively high. It may be too soon to say for sure, but it does look like a sign of distribution that is known as churning, shares are exchanging hands but price is not appreciating, it's a form of distribution.

This UUP hourly chart which has good correlation with 3C signals, seems to confirm what I suspect above, you can see the indicator suggesting distribution into higher prices. The Red box is a leading divergence.

Contrast that with the DBO hourly chart, which again shows good results with 3C divergences, and we see a positive divergence or apparent accumulation into lower prices. Being this is on an hourly chart, it is pretty serious and suggests that the move could be strong to the upside.

Again, DBO 15 min chart (I believe we first saw this happening on a 10 minute chart, a 15 min chart is more serious) shows apparent accumulation into the lows-and good working correlation with 3C. It has even crossed into a leading positive divergence.

DBO 5 min chart. Again, here on the 5 min chart we are seeing the same-around the same time the market appears to have started its accumulation today.

Considering the Dollar's stance and Oil's stance, it seems likely that there is accumulation for a move higher. I'm not sure what the impetus will be, perhaps a falling dollar, perhaps something else, but it seems pretty likely that will be the most probable outcome from what the charts are showing us. As to when, I'll have to be on the lookout for a strong 1 min positive divergence, I haven't seen that yet, that seems to be the best bet.  Usually that move will begin a move up in the issue-oil. We just have no way of knowing how much they intend to accumulate as they will try to sell into higher prices. It seems rational that the more they accumulate, the higher and longer they'll need to push the oil rally to unload the shares.