Forex Strategy Video: Trading Opportunities in EURUSD, AUDUSD Relationship
• When pairs have strong correlations, it is often a sign of a common fundamental driver
• Deviations from normally linked pairs can reflect a fundamental shift with potential trade implications
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There are many currencies, pairs and general market classes that carry strong correlations. Those relationships speak to underlying fundamental themes. Yet, just like a technical reading, these correlations can sometimes oscillate as catalysts and themes wax and wane in influence. Rather than work out the complex web of fundamental relationships between pairs, we can instead look at the technical relationship in price. And, when a historically strong link between two pairs deviates - and is likely to realign - we can identify trading opportunities. In today's Forex Strategy Video, we discuss a rudimentary way of viewing correlations.
Market conditions change, and our strategy should reflect those changes. We have coded the DailyFX-Plus strategies for Breakout, Range and Momentum to adapt to these market shifts.
DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.