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Stock Market Forex Correlation Adjusting?
Here are three 240 minute charts of the Dow Jones futures, the Euro, and USDJPY. It's easy to see that over the last two week's we've seen a fairly significant break-down between the previous correlation between US stocks and USDJPY. We're also seeing similarities now between the Dow chart here and the EUR chart over the same period. From a technical stand-point we know to never take a trade in one market based on the behavior of another disparate market, and these charts highlite why. If you are a begining trader, and follow technical analysis, you don't want to get in the habit of eyeing a trigger in one market, and then checking direction in another market for confirmation. We call that "trading corn in the wheat pit" and it may work for a bit, but we know it's something that changes, and when sticking to your trading plan repetition and reliability are key, so there is no room for trading on fluid correlations. U.S. stocks and USDJPY are not correlated as a 5-year U.S. Treasury Note and 10 year U.S. Treasury Bond are, and if your learning to trade you need to know that. Back to the charts: I think it's significant that we saw a lower low for the move in stocks which confirms yesterday big change of direction candle Jya Norris [url]www.brewerfx.com/jnorrisedu/[/url] DISCLAIMER: Forex (off-exchange foreign currency futures and options or FX) trading involves substantial risk of loss and is not suitable for every investor. Risks include the potential that changing political/economic conditions may substantially affect the price/liquidity of a currency. Investors may lose all or more than their original investments. The impact of such events is already factored into market prices. The leveraged nature of FX trading means that any market movement will have an equally proportional effect on your deposited funds and may work against you as well as for you. In no event should the content of this correspondence be construed as an express or implied promise or guarantee from Brewer Investment Group, LLC or its affiliates that you will profit or that losses can or will be limited in any way. Loss-limiting strategies such as stop loss orders may not be effective because market or technological conditions may make it impossible to execute such orders. Past results are no indication of future performance. Information contained in this correspondence is intended for informational purposes only, was obtained from sources believed to be reliable, but is in no way guaranteed.