RV Simplifed - Krümel’s Voodoo
Updated
RV Simplified:
I get this question all the time, and even though the concept is simple, many people have a hard time getting their heads around it.
Here is snapshot of above at time of publish. Sept 19, 2018, 7:30am ET.
As the above LIVE chart will not last more than a day.. accurately.
——————-
Q- When DXY falls, WTI follows right?
A- No.. they fall and rise at different rates, on some Timeframes they will be inverted (say 10min) while on 4hr they will both trend in same direction.
I look at the value of oil in Dollar , as well as other currencies. But oil is priced in dollars.. so it will always gravitate to that level. This is based on the amount of volumes being traded in other currencies. (I believe) .
Q- So having a weaker pound, yen and eur will equate to oil price going up as we get more dollars? right?
A- Sure.. and vice verse..
Let’s say nobody trades oil for 1 hr. But during that time the Doller dropped by 10%! Those wanting to buy oil from you in EUR, would need to pay 10% more to keep you even, or you would need to sell at 10% loss. BUT -If I’m buying from you and in dollar. Price doesn’t change as we are both using dollars. - Extreme example.
So the price of oil is based on what buyer is willing to pay.. if those in U.K. (above example) are willing to pay the 10%, but most of the buyers are in US. The price will only go up buy the amount of volume those U.K. buyers represent.
Now do that for EUR, YEN, GBP, and Doller.. that’s RV!
Lastly - I treat SPX like a currency (normalized to dollar) SPX is a great scale on daily movement. Not always coupled but use 2 day range to set scale. I think this has to do with the ETFs and truly they are the volume in PaperOil.
I get this question all the time, and even though the concept is simple, many people have a hard time getting their heads around it.
Here is snapshot of above at time of publish. Sept 19, 2018, 7:30am ET.
As the above LIVE chart will not last more than a day.. accurately.
——————-
Q- When DXY falls, WTI follows right?
A- No.. they fall and rise at different rates, on some Timeframes they will be inverted (say 10min) while on 4hr they will both trend in same direction.
I look at the value of oil in Dollar , as well as other currencies. But oil is priced in dollars.. so it will always gravitate to that level. This is based on the amount of volumes being traded in other currencies. (I believe) .
Q- So having a weaker pound, yen and eur will equate to oil price going up as we get more dollars? right?
A- Sure.. and vice verse..
Let’s say nobody trades oil for 1 hr. But during that time the Doller dropped by 10%! Those wanting to buy oil from you in EUR, would need to pay 10% more to keep you even, or you would need to sell at 10% loss. BUT -If I’m buying from you and in dollar. Price doesn’t change as we are both using dollars. - Extreme example.
So the price of oil is based on what buyer is willing to pay.. if those in U.K. (above example) are willing to pay the 10%, but most of the buyers are in US. The price will only go up buy the amount of volume those U.K. buyers represent.
Now do that for EUR, YEN, GBP, and Doller.. that’s RV!
Lastly - I treat SPX like a currency (normalized to dollar) SPX is a great scale on daily movement. Not always coupled but use 2 day range to set scale. I think this has to do with the ETFs and truly they are the volume in PaperOil.
Note
I like 15min Heikin to set scale.. but Heikin is not good for live tracking. Standard candle best for live. Here is Heikin version.Note
EOD - notice changes. Will cover setup adjustments later.Note
Ok.. let’s do an experiment .. and a prediction.This is locked 10min RV chat. I predict we will close today on DXY or S&P RV.. my bias is S&P. Could be both?
On experient, this chart will not be adjusted and we will see price action comparison to Currency RVs throughout day.. 7:45am ET, sept 27. Will update 5pm.
Note
Same test on 15min RV. Locked same prediction Note
Opps yesterday was nuts.. forgot to post at 5pm. Here was locked 10min. Dxy Eur GBP off chart. I did not want to change scale because I wanted to demonstrate days action unaltered. Anyway S&P was the main RV.
Here is locked 15min.
Today Sept28.. start.. will not lock today’s for comparison.
15min
And 10min.. US market open.
Good luck !
Note
EOD, big currency spreads.. 15min.And 10min.
Note
Just based on my observations over last three years with RV, Ibelieve many of the Algos/big players are using an arbitrage on dollar with other currencies. With interest rate difference of 2.25+ with leading (not EM) currencies. This seems to be some sort of a carry trade. Something Clt and I discussed years ago.
Note
Today’sNote
Will be posting a few reset steps.. Will start here. We know general market is the driver, but price action could follow other currency RV, not jut coupled with SPX.
s3.amazonaws.com/tradingview/snapshots/r/r4BPkkjt.png
Note
Same RV chart ,with just SPX scaled and value change. s3.amazonaws.com/tradingview/snapshots/r/r4BPkkjt.png
Note
Sorry posted same chart twice.. no way to edit. This should be the start chart 1.Low Spx to others.
s3.amazonaws.com/tradingview/snapshots/f/fe6IW2m8.png
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