People don't actually realize how commodities influence markets in a very strict way.
In this sense, I like to address Oil as the 'father' of all commodities. Taking into account that every son/daughter needs a mother, than I usually address the USDx as the 'mother'(or wife for that sense) currency.
By simply watching both of these, you can get a pretty good sense of how other markets could/should behave in a given time frame.
Last night, it was no different. Just by doing some cross-analysis between the USDx and Oil I was able to kind of predict the following sessions moves (Asia-Europe-US). Not that this was enough to open a trade, but it gave me a very good hint of where and when to trade.
USDx had very short term unpaid divergence pointing upwards by the beginning of Sydney which was filled during Asia, from that point on several different unfilled bearish divergencies were pointing towards a move south.
On the other hand, we had oil inside a consolidation M30 (triangle) that had already 4 sequential touches across.
Having these in mind, I knew that the consolidation break north was imminent and that USDx would seek lower levels most probably late into European session.
Next day I wake up and see that everything went almos exactly as expected. However, the imminent break (in oil) had not happened yet. Well, it did happen during late Europe and early NY...
So all the USD pairs indeed became bearish.
Making a long story short, look out for other indications that can help you to be on the right side of the market.
Don't need to be any Nostradamus. Might as well use common sense.
Next posts I will try to show the Oil trade and elaborate the USDx - Oil connection thru charts.
Happy trading to all.
By the way , I called these before I went to bed on my twitter ;-):
http://twitter.com/#!/MCapitalMarkets
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