this time I want to show you how the PotenzaFX indicators set can help you understand what’s happening in the Forex market.
In the post about currencies correlations we divided the 8 major currencies in 3 groups.
The first one is the one directly correlated to the stock market (AUD, EUR, NZD). The second is the one inversely correlated to the stock market (USD and JPY). And a third directly correlated to commodities (CHF with Gold and CAD with Oil).
We said that lately GBP was in between Group 1 and Group 2. We noted that the GBP was starting to “move” from Group 1 to Group 2. What we’ve seen in the last few days is that the GBP can now be considered part of Group 2.
What that practically means is that we should stop trading:
as GBP and JPY/USD are now directly correlated. While we should start taking a look at:
as GBP and AUD/EUR/NZD are now inversely correlated.
The interesting thing is that this “relocation” preceded the UK decision to leave European Union by itself to solve their economic/political problems.
Maybe Mr. Cameron uses PotenzaFX to take his decisions 😀
In reality, what’s important is to know how those choices impact our currency trading.
There are people that say that the Market already knows what’s going to happen and that “news” are already IN the price when they are released.
Well, it may be so. What’s sure is that PotenzaFX was showing that well before it was clear to everyone. Also, we don’t know for how long the GBP will continue to act like that and if and when it’ll come back to be part of Group 1.
But, again, PotenzaFX will surely tell us 😉