Forex Correlations - This week Trading USDCAD,H1
This
week we look at another currency pair USDCAD,H1 which was one of the most trending pairs. I have plotted Forex correlation indicator with all major correlations pairs on the indicator chart. We see USDCAD H1 currency pair trending downward this week . As you
can see USD(Red line) was weaker and falling and was below CAD
(Blue line) plotted as
a baseline for ease of viewing. Hence, we would go short and the short position
closed out on Friday.
Forex Correlations - Background
To be an effective trader, it is important to understand how different
currency pairs move in relation to each other so traders can better
understand their exposure. Some currency pairs move in tandem with each
other, while others may be polar opposites. Learning about currency
correlation helps traders manage their portfolios more appropriately.
Regardless of your trading strategy and whether you are looking to
diversify your positions or find alternate pairs to leverage your view,
it is very important to keep in mind the correlation between various
currency pairs and their shifting trends. It is clear then that
correlations do change, which makes following the shift in correlations
even more important. Sentiment and global economic factors are very
dynamic and can even change on a daily basis or even hourly basis. Strong correlations today
might not be in line with the longer-term correlation between two
currency pairs.
Happy Trading - Get Your Trading Edge
