Inside the Currency Market, WTI
|Recall the WTI trade last December from 44 ish to 52 for 8 quick points in 1 or 2 days. It was the best and only trade available. The recommendation then was leave WTI alone above 52.00's. For 6 months, WTI traded above 52, around significant averages and trended higher at barely 2 points per month. The top at 60's was missed but my specialty is currencies so wasn't interested in a top.
What changed since December was the overall averages changed slightly yet to no significance but ranges remain today as then at maximum 22 points.
Why dead ranges is because WTI contains negative correlations to DXY, 2 and 10Y Yields, S&P's, and Fed Funds. WTI Positively correlates to GDP. If GDP goes higher then WTI will follow. WTI is a lost price and doesn't have a clue where to trade.
I suspect many other commodities also contain dead ranges and no correlations. The reason is a vast majority of currency and commodities trade below 5 year averages. Of 29 Currency pairs including DXY, 8 trade above 5 year averages while 21 pairs trade below. WTI trades below at 56.69.
If the FED Cuts interest rates and I haven't seen a good argument as to why then ranges for all financial instruments, including currencies will compress further. The higher prices travel then the expansion of ranges will be seen and the faster prices will move. Downside won't experience the same quickness to drops as prices are already deeply compressed and lay on the floor.
The top in WTI is located at 63.71. At 56.69 represents a big break for WTI to move higher but 53.02 and 56.06 must break. The next trade we want entry at around 48.75 to target 51.89, 52.46. A break at 53.02 then targets 56.06.
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