A most unusual Triad [USDCAD; DX; Oil]

[Mercury]

My main objective as an analyst is to identify trend changes early so I can trade with the trend.  I also like to see related markets in correlation as this adds weight to any technical analysis I might have in play.  At the end of last week Brent Crude seemed to hit support right in the zone I was forecasting (i.e. at the Flag upper line - see chart).  At the same time USD (Dollar index) appeared to stumble in its recent rally and reverse.  Whether this reversal delivers a lower low or simply a retrace to the lower Triangle is as yet unclear and in any case moot so long as the near term direction is down.  Supporting this view my analysis of GBPUSD; EURUSD and USDJPY all indicate weakness in USD, albeit of a temporary retrace fashion.  All of which brings 2 forces to bear on USDCAD being USD weakness and Oil strength (which = CAD strength).

 

If all of this remains true for the next few weeks or so (say the month of September) then we can expect a rally in Oil and a bear move in USDCAD and DX.  This could all culminate in line with Stock market tops as separately posted.  In particular USDCAD could be in line for a very strong move down to a Wave 4 end before a strong rally.

 

Here are the daily charts for all three, what do you think?

 



[donaldprice]

Looking at the oil presently, it seems to me that we still have not completed the retracement of the down side and on the hourly time frame we see a nice ABC or W4 of C of the retrace. Therefore we could potentially see some more down side.

I also have queried the possibility that on a weekly time frame we could be seeing an overall ABC, but I would not be an advocate for this general weekly pattern as I have not analysed it enough. But on a 4 hourly I do see some further downside before the leg up.



[Mercury]

That could be  but Oil is a capricious market and often doesn't fully conform to EWT (or at least not nice easy to see ones).  Note I am assuming you are basing your assessment solely on EWT count, maybe you have other signals of this final leg?  Also when it runs it runs hard so if you want to trade Oil (actually almost any commodity I think) you have to get in on the initial breakout and stop protect then if there is another retrace go again.  There is just as much chance that this market fires away in a rally next week as there is a retrace.

 

What I was looking for was a retest of the flag formation on my Daily chart, which I got with a touch and rebound of the Fib 62%.  This is a historically reliable signal in my experience and certainly fulfilled all the criteria I have in my trading "rules" so I went Long.  If there is a retrace to a new low and another touch on the Flag line then I will get stopped out and go Long again, that's trading.