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Scalpers, Intra-Day, Position & Swing traders alike benefit from the correlations seen between the US

Dollar Futures Index (DX) & Commodity Futures such as Gold (GC) & Crude Oil (GC). The US Dollar

Index Futures is one of the most widely-recognized electronically-trader markets in the world.

Comparing the USD against a basket of major currencies, this futures index has relatively low daily

trading volume compared to Euro or Pound, and is primarily used for its strong correlations to aid

traders in many different situations. Professional traders watch the Dollar Index at the times it is most

active, which occurs from 8am to 12pm EST during trading days. The times also correspond well with

Crude Oil & Gold futures, which also see more activity at these times as well.There are many ways to

use the US Dollar Index for trading opportunities, but most traders find the DX to be most

consistently-used as a filter for high-risk trades.

Trade Commodites

Let's first discuss the basic correlation that traders use. There is a negative correlation between the DX

and almost every other market that traders watch. The Dollar is negative to other currencies b/c it's the

world reserve currency, and it's negative to commodities b/c of the simple laws of supply and demand.

Let's focus on the correlation to Gold & Crude Oil Futures.

(When the Dollar is rising, Crude Oil & Gold falls)

As traders, there are lots of different times in the day when the dollar begins to move more

dramatically, such as the open of the US Markets @ 9:30am EST, before and after major news events

such as Jobless Claims Reports or FOMC News. We look for the Dollar to begin its trend, and using the

negative correlation between these markets, we look for crude oil & gold opportunities to the opposite

of the dollar's trend. When the Dollar is trending, traders use Breakout Patterns to capitalize on thiscorrelation. With the dollar rising, look for high-percentage entries to the short side of Gold or Crude Oil

Futures.

(When the Dollar is flat, the Crude Oil & Gold is flat)

Most traders will use the Dollar correlation as a filter because it allows them to avoid high-risk entries on

Gold & Crude Oil Futures. Without a trend on Dollar, the Gold & Crude Oil Futures also show flat price

action, and tend to reverse their current trends often. The dollar has a tendency to get very choppy

during indecisive times in the market, and we tend to stay away from higher-risk trading on Crude Oil &

Gold during these times.

(When the Dollar is Flat, Traders use Trend-Reversal Patterns to Capitalize on this correlation)

Another important thing to watch on the Dollar is key Support & Resistance around simple chart

patterns. For example, using a Head & Shoulders pattern on the Dollar, traders will avoid trading Gold &

Crude Oil when the Dollar attempts to complete the trend reversal. Smart traders will wait to trade the

reaction to the move around these extreme levels, rather than trying to be the first to enter the market

when the Dollar here. In closing, the Dollar Index Futures can be used very effectively with a negative

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correlation with many of the market we love to trade. Of all the uses for this index, the most effective

way most traders use the Dollar is as a filter, to avoid taking high-risk trades on other markets such as

Crude Oil & Gold.

http://www.liveoilprices.co.uk/oil/tag/dollar-index/page/9/

Tag Archive: Dollar-Index

Brent oil price nears $85 on weaker US Dollar Index

Brent oil futures open trading near $85 a barrel as oil prices moved higher mainly due to US Dollar Index

weakness in currency markets.In London, Brent crude oil futures for ...

WTI oil price ends week near $82 on weak Dollar Index

WTI oil prices end the week higher, nearing $82 as a weaker Dollar Index helped oil futures and other

commodities including gold to maintain an upward momentum.US Light crude oil ...

Brent oil price at $79 as US Dollar Index trading lower

Brent oil prices open trading stronger this morning and are hovering around the $79 mark as the US

Dollar Index is trading lower suggesting that the US dollar has more ...

Brent oil price finishes near $79 on weak US Dollar Index

Brent oil futures are back near the $79 mark at the close of trading yesterday, with oil prices and

commodities moving higher as the US Dollar Index gets hammered below ...

Brent oil trading near $78 as Dollar Index moves higher

Brent oil futures open Friday's trading session lower in the $77 to $78 range as the US Dollar Index

moves higher and may test Brent's support levels.In London, Brent crude ...

Brent oil trading at $78, US Dollar Index slides under 80

Brent oil prices open trading under $78 a barrel on Thursday amid a weaker US dollar which is now back

under the 80 marker on the ICE Dollar Index.In London, ...

Brent oil trading firm at $78, eyes on US Dollar Index

Brent oil futures are trading firm over $78 a barrel on Wednesday as yesterday's US Fed comments on

the US economy and money prinitng send the US Dollar Index on ...

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WTI oil price trading over $75 on weaker US dollar

WTI oil prices are trading over the $75 mark on Wednesday as the US dollar looks weaker, helping

commodities including oil futures and gold to rise.US Light crude oil futures ...

Brent oil price trades over $79 as the US dollar weakens

Brent crude oil prices are trading over the $79 mark on Tuesday as the US dollar weakens, boosting oil

futures and other commodities including gold which is mantaining it's all ...

Brent oil trading firm at $78 as ICE Dollar Index falls

Brent oil prices open the week's trading session firm at the $78 a barrel mark amid signs that the ICE

Dollar Index is heading lower.In London, Brent crude oil futures ...

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Brent oil prices open Friday's trading session around the $79 mark as a falling US ICE Dollar Indexsupports Brent oil futures with a weaker US dollar against other currencies ...

Brent oil price near $79, US Dollar Index remains mixed

Brent oil prices are hovering around the $79 mark on Wednesday as stock markets remain mixed and

the ICE US Dollar index falls lower, then regains some ground.In London, Brent ...

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WTI oil prices open the week's trading session up over a dollar and through the $77 mark as the US

Dollar Index looses some ground and reverses last weeks gains.US ...

WTI oil price hangs near $74 amid higher Dollar Index

WTI oil prices are trading firm near the $74 mark on Wednesday amid falling global stock markets and a

higher US dollar, as shown by pointers in the US Dollar ...

Brent oil price holds firm at $76 amid rising Dollar Index

Brent oil futures are trading firm at the $76 to $77 price level in Asia today amid a rising US Dollar Index

having little downward effect on the contract.In London, ...

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