CL Redux

Quote from ammo:

THEY ARE TRADING CL OFF THE DOLLAR MOVES,THERE IS A FORECAST THERE FOR YOU THEY ARE DIRECTLY CORRELATED SO ITS LIKE WATCHING ONE MARKET,IT WILL MINIMIZE THE TIMES U GET BURNT AND LEAD U INTO A LOT OF TRADES sorry about the caps,no retyping
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I just looked at the DX and euro charts ... the euro looks somewhat correlated, but not enough for me to be able to make trading decisions off of-- can you give me an example of how you would use it?

I've heard some people say that because the dollar is up against a resistance then oil will .... and so on, and there may be short term correlations but the technicals in oil give me enough info to trade off of--the info is not the problem, I am ;-)
 
Quote from JoshDance:

Cancel that order-- I am long .56 stop .44 target .88
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Even as I took this order, it did not feel right. There was too much selling volume, yet I held--an example of me being stubborn and wanting to be right instead of going with what I see. My gut said "hit the reverse button" but my ego said "hey buddy, you might just feel super smart if this works!"

The obvious takeaway message I should have gotten is that at 2:00 (a good time for reversals too), we failed to break the .75 previous 5m bar high by even 1 tick (which would have taken me long), and this was the key level for me as it was the prior high of the day before it was broken by the late run up. That information in and of itself should have been a signal to be looking to short. I felt uneasy about even placing the long stop at .76 because the volume pushing against the .75 was just weak, too weak to long, but I did that anyway. Then I let my long bias continue, and that's how it so often goes.... can be a good lesson for me and others to trade what you see in front of you, not what you think might happen.
 
Quote from ammo:

cl compare the spikes to the next 2 charts
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Thanks ammo. I honestly see no useful correlation for me, and think that it would only hurt my trading to have to focus on other markets which may be strongly correlated one day, and loosely correlated the next day. If that helps your trading which it obvious does, then more power to you, I think it's great when people can see the relationships, but it's just not conclusive enough for me to use it.

I see clearly on the chart how the s/r in the euro matches with the movement in CL, but it's just too much input for me to process at one time, in real time. If I were going to watch the euro, perhaps I would just trade the euro and not worry with CL.
 
the dollar is not loosely correlated, the oil is priced in dollars so as the dollar drops they have to add to the oil price to take same profit and vice versa,direct correlartion,if dollars rising and oil is dropping,and if you know where ressitance is on the dollar,you can plan to cover your short at dollar res where the oil supp might be 50 cents lower and it turns early,you will see why
 
Quote from ammo:

the dollar is not loosely correlated, the oil is priced in dollars so as the dollar drops they have to add to the oil price to take same profit and vice versa,direct correlartion,if dollars rising and oil is dropping,and if you know where ressitance is on the dollar,you can plan to cover your short at dollar res where the oil supp might be 50 cents lower and it turns early,you will see why
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It sounds as if you're implying that when the dollar moves a certain amount, CL moves a certain amount, and that the relationship is always the same, or at least similar. (actually, we should be using the term "inversely correlated"). However, that is not the case.

Hence, I use the term "loose correlation" because sometimes they are more strongly correlated than others. A drop of $X in the dollar may lead to a $Y rise in oil, but next hour it may be that a drop of $X in the dollar may lead to a $Y/2 rise in oil, or maybe it's $2Y. See these articles. The last two are quite old, but that is not relevant--the point is that markets change in relationship to one another over time.

http://www.bespokeinvest.com/thinkbig/2011/7/12/equity-vs-oil-correlation-falling-apart.html (from July)

http://blogs.wsj.com/marketbeat/2008/06/11/the-dollar-oil-relationship/ (from 2008)

http://www.reuters.com/article/2009/02/05/us-oil-dollar-analysis-idUSTRE5146HM20090205 (from 2009)

I very much appreciate your information and I hope I don't come across as argumentative, because that's not my intent at all. It's simply to present my point of view that markets have a complex relationship, and my limited capacity to focus on only one market at a time makes it difficult for me to try to use these relationships in real time to make trading decisions.

I think if I saw the dollar index or the euro headed for a major support or resistance area, the logical thing for me to do if I believed it would stop and reverse, is simply to put on a reversal trade on the dx or the euro--for me, why take it a step further and trade another instrument based off of that, when I could just trade the source? Again, just me and what works for ME, not what anyone else will find logical or useful.
 
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