Forex Investment and Currency Trading

There had been a correlation between movements in EUR/USD and the price of crude oil, although the dynamics driving that relationship appear to have shifted. Over the last 6-12 months it appears an asymmetric response function among major central banks to movements in oil prices that may have contributed to the correlation between EUR/USD and the oil price. Given rising headline inflation in the Euro zone and the ECB’s sole mandate of inflation control, rising oil prices were viewed as an upside risk to inflation. For the Fed and its dual mandate, however, rising oil prices marked an upside inflation [...]

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The oil market is trading like it is out of gas and we are bouncing right upon the 40-day moving average, a line which has defined the up trend since early February. As you can see from the chart below, a daily close below the 40-day would be very significant technically and should open up a quick move to 122.00 and a reassessment of the debate between “speculative momentum-driven bubble” vs. “legitimate structural rally”. The likely idea that momentum and index investors are responsible for the most recent price increases on the simple argument that the combination of increasing supply [...]

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The move below the $135.14 area opens up the possibility of a double top forming that could give a much deeper correction with a target of the mid $120’s BUT
The day is young and we may not sustain the break at the close and there is very good support in the $130.80 to $131.50 range (trend lines and 55 day moving average)
The present correction so far has been 10.4% high to low compared to a similarly aggressive correction in March of 11.4%, which became a platform for a renewed surge when the 55-day moving average did not give way.
So the [...]

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(06/12) Crude continues to trade in the rising channel and the trend is up. There are few indications to suggest the uptrend is in trouble.
(06/05) The hold of the support area just above $120 and the subsequent bullish key day reversal today leads us to believe that the correction is over and that Crude may now rally to yet another new all time high.
At least $140 with a possible extension towards $155-160 now looks a danger
(05/29) The rising trend line across the highs comes in at 4138.
(05/22) Very difficult to call tops in moves like this as we have seen. [...]

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Commodity and FX Bottom Line: Crude oil prices have entered in to a corrective phase based on Elliott Wave counts and valuation profiles. Supportlevels at 120.75 and 116.40 feature prominently in this scenario – with intermarket relationships suggesting that USD/CAD could extend gains to1.0238, followed by 1.0343.
Crude oil prices appear to have completed the 5th wave of an Elliott Wave structureafter failing in a thrust above the internal ascending channel top at 130.54.
This development has been amplified by the fact that the daily studies had formed two multi-month bearish divergences from overbought levels.
Equivalent overbought extremes triggered price corrections in March [...]

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