DXY, EUR, sugar, heating oil and SP500 analysis [Video]

We have discussed previously a potential rally in the American dollar. Now we are getting really close to the potential entry. However, accumulation is weak. That means it will take another week or two to get a signal. Accumulation builds momentum. That's why it is so important. We have very strong fundamental setup for DXY rally:

• COT - commercials are heavily long
• Evaluation model - the dollar is undervalued
• COTSI Index - very high
• Intermarket forecast - upside.

We need a technical signal to confirm the coming rally. It always takes some time to get one once we have a fundamental setup. So, likely we will see a bit more of a rally coming in a few sessions, followed by a pullback. It will give the dollar enough time to build momentum and form a signal to go long.

It makes perfect sense to expect a decline in EUR. Early this week the market can test 1.1630 and later bounce for a few days to form a signal for sellers. There is no need to hurry and pick up a trade now. Let the market do its thing and form some pattern to get clear entry with a good risk/reward ratio.

We often take swing trades in Sugar. This market follows fundamental setups very well. So, here we have potential decline coming again. Commercials are selling sugar as per the recent COT report. It doesn't mean an immediate trend change. We still have some room left to the upside. It usually takes a few weeks to form reversal.  So, we just look for potential short signals. Commercials are producers and users of the commodity. Noone in a word knows their business better than they do. We don't want to trade against them. It is always better to wait and to look for an entry in their direction.

We have talked about the coming decline in Crude Oil. But it seems to me Heating Oil is weaker. So, it makes sense to focus on this market. I think we are very close to a swing entry in HO. Possibly the market gives entry even this week. However, conservative traders have to wait till price breaks and holds under the daily trendline.

Some time ago we discussed a possible retest of 3400 in SP500. That is exactly what is happening right now. 3400 is the magnet now. The Advance Decline Line is weak. So, likely we will see a profit booking near the double top. Besides, we see signs of distribution in volumes. Big players are getting out of the market slowly during the last few weeks. I am looking to take short signals in this market. Based on the Fed Funds Forecast I expect this sell-off will give a great buying opportunity. However, let's take it step by step.