New 2009 Lows For US Dollar And Highs For Crude Oil

The intermarket relationships are reasserting themselves as expected, as we’re seeing weakness in the US Dollar Index and strength in Commodities - we recorded fresh 2009 lows for the US Dollar Index and fresh highs for Crude Oil, the S&P 500 (^GSPC: 943.48 +0.61 +0.06%), and mere points away for 10-Year Treasury Yields and Gold.

Let’s focus on the Dollar vs Crude Oil:

As I’ve mentioned various times, the Dollar Index was completing a Bear Flag, and now we’ve exceeded the downside targets projected from that flag - that’s not good for the Dollar Index - it shows stronger than expected weakness.

The only ’support’ in sight is that from the $78 level which is minimal at best from the December 2008 lows - breaking that level would take us to lows not seen since September 2008.

A falling dollar is inflationary, and in an environment where ‘deflation’ is the concern, that’s proving to be bullish short-term for the US Stock Market (which also made a fresh 2009 high today).

Let’s now take a look at Crude Oil’s new high on its daily structure chart:

Crude Oil Daily:

Just as the US Dollar Index completed a Bear Flag, Crude Oil has completed and exceeded the targets of a Bull Flag that formed off the February Lows.

We also got a “rounded reversal” and multi-momentum divergence that preceded this stellar rally upwards, in which Crude Oil prices have almost doubled in price.

I have to admit, even being bullish Crude Oil, the relentless buying pressure of the last three trading sessions surprised even me -we’re likely in the middle of some sort of 3rd wave fractal move up in Crude (and down in the Dollar).

That’s not to say these trends will continue forever - keep watching the Dollar along with the other key markets very closely as we continue to get new information each day.