Dollar Index lacking momentum....where's the next trade? Silver and Sugar look interesting

As highlighted in my previous blog, the Dollar Index was, and still is, in a consolidated wedge. Although it broke through the bottom of the range, as suggested the bias was due to the previous lower high, it has lacked momentum to the downside and may come back within the range. The FOMC statement, even though slightly dovish, had no real impact. To end the week traders were looking to the BOJ meetings for some liquidity and momentum but the market already priced in the announcement of a net QE increase of 5 trillion, however, Shirakwa's cautious comments may not help USDJPY bull's.

However, even though the majority of major and minor pairs have been ranging and choppy, the cross pairs have provided decent trading opportunities.

The commodity sector right now looks to be providing some potentially decent trading opportunities. Two trades I am currently looking at is spot Silver and Sugar Futures.

The chart below of Silver shows a significant retracement to the 61.8% Fib level, 1.618 Fib ext of the smaller previous wave and a previous support level. Various oscillators are diverging over the longer term and shorter term. If the week ends as it is then we may see a weekly low test which adds to the case of taking a long position.

The chart below of Sugar futures (11), shows price action moving towards a Fib extension of 1.618 which coincides with its lowest low for 2 years. Technically there is a strong reason for a price correction and some profit taking due to its oversold nature. Fundamentally, whilst the downtrend is attributed to a sugar surplus, many analysts are predicting a smaller harvest from Brazil, this coupled with increase in quota for low-tariff sugar in the US may add to the technical reasons for a trade long.

Have a great weekend!