It dawned on me the other day, why do we look at FX charts as PAIRS?
Wouldn't it make more sense to look at FX charts as we do any other trading instrument such as stocks, oil, gold etc.
For example, if you think about the situation that would have to take place for the EUR/USD to be rising as part of an uptrend you would need 1 of 3 scenarios happening:
1) EUR strengthening while USD weakening
2) EUR strengthening while USD neutral
3) EUR neutral while USD weakening
Now if you think about it, scenario 1 is going to cause the most upward movement in EUR/USD because there will be more upward momentum pushing it that way as opposed to the other 2 scenarios. Knowing exactly what is driving price at any given moment on a PAIR is undoubtedly going to help determine how strong the move is and more accurately what we can expect in advance from carrying out proper analysis on what is actually doing the moving, rather than what is merely reflecting the movements..
So, I am left wondering, wouldn't it be better to carry out analysis on individual charts rather than pair charts in FX since we could determine which scenario we are in that is driving price and therefore more accurately understand whats going on, not to mention be able to put currencies that are rising and weakening at the same time against each other for strong moves..
Why is this? Thanks.
Wouldn't it make more sense to look at FX charts as we do any other trading instrument such as stocks, oil, gold etc.
For example, if you think about the situation that would have to take place for the EUR/USD to be rising as part of an uptrend you would need 1 of 3 scenarios happening:
1) EUR strengthening while USD weakening
2) EUR strengthening while USD neutral
3) EUR neutral while USD weakening
Now if you think about it, scenario 1 is going to cause the most upward movement in EUR/USD because there will be more upward momentum pushing it that way as opposed to the other 2 scenarios. Knowing exactly what is driving price at any given moment on a PAIR is undoubtedly going to help determine how strong the move is and more accurately what we can expect in advance from carrying out proper analysis on what is actually doing the moving, rather than what is merely reflecting the movements..
So, I am left wondering, wouldn't it be better to carry out analysis on individual charts rather than pair charts in FX since we could determine which scenario we are in that is driving price and therefore more accurately understand whats going on, not to mention be able to put currencies that are rising and weakening at the same time against each other for strong moves..
Why is this? Thanks.