Does oil price have a direct inverse relationship to US dollar? Sound like a yes from this chart There have been many articles on the direct inverse relationship between Oil & USD fundamentally but with relatively few charts to support the claim.
I thought if this is really the case, i should be able to do something on it. Using USO (US Oil fund) divided by UDN (DB USD Index Bearish), the outcome is awesome, almost the carbon copy of Crude Oil futures chart (CL1!)
For USO/UDN, whenever this ratio hits the top, it means oil price peaks and Dollar bottoms (irregardless of whether major or minor peaks or bottoms). Inversely, when oil price bottoms, dollar hits top.
By overlaying CL1!, i use green vertical line for PEAKing of USO/UDN ratio & Crude oil while red vertical line represents Bottoming of USO/UDN ratio & crude oil
So i anticipate that when next USO/UDN ratio & crude oil hit a bottom and reverse, that is the time when USD peaks out. I really do not care about fundamental reasons of WHY Oil & USD behave this way, i just need to see what the chart shows me which is enough for me to trade.