In case I didn’t make the point clearly enough about the correlation before, I made some charts to make it clearer.
Here we can see the specific dates, showing the synchronization of the dollar strength to oil price.
Later we can add other commodity charts with similar marks, to see how the correlation holds.
The main point is, the dollar is in control of prices. Central bank actions are in control of the dollar. International central bank interactions are in control of the US Central bank.
Based on these things, and technical charting, we can guess the direction of the dollar (which I’ve done elsewhere) and use that to guide our larger scale wave trades in oil.
Oil since the fall
The dollar since the end of “QE”
We can see the wave synchronization is nearly perfect.
The dollar usually led by a bit.
The oil bottom was hard to guess, 2-11- 2016…there was no real technical reference. Media had all kinds of wild guesses.
But the sharp slide in the dollar led it by 10 days.
The dollar bottom in 5-3-16 was technically easy to pick out. It was a range trade I detailed elsewhere. Oil topped 1 month later.
You can look deeper for fun and profit.
Once you are convinced of this, if you want to track larger commodity price swings, the next step is to chart the dollar, and track central bank and political policies.