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Pairs of Currency Pairs

  • Post #1
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  • First Post: Sep 2, 2012 1:45am Sep 2, 2012 1:45am
I was interested in seeing the behaviors of pairs of currency pairs with a matching currency. In this case... The GBP/USD vs the EUR/USD. I didn't balance them out perfectly. Just subtracted one from the other.

The key thing you will notice is that the pairs of currency pairs trend and pattern pretty much the same as currency pairs.

One currency maintains strength over the other for a matter of hours before the trend reverses and the other maintains strength for a number of hours. It's like a game of catch up... If one pair trends far ahead of another for a few hours the other generally tries to catch up a bit. Especially with the GBP/USD and EUR/USD.

I am not interested in trading the pairs of currency pairs... But it's rather interesting to see they trade the same as currency pairs if they have at least one matching base currency. Same types of patterns and divergences and everything.
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Quoting MasterGamble
I was interested in seeing the behaviors of pairs of currency pairs with a matching currency. In this case... The GBP/USD vs the EUR/USD. I didn't balance them out perfectly. Just subtracted one from the other.

The key thing you will notice is that the pairs of currency pairs trend and pattern pretty much the same as currency pairs.

One currency maintains strength over the other for a matter of hours before the trend reverses and the other maintains strength for a number of hours. It's like a game of catch up... If one pair trends far ahead of...
yes indeed ,i have been using 14 pairs and 7 indicies value changes as the core of my trading for years now,i refer to this map before making any trading decisions,people would be amazed at how much information you can find within them,infact on occasion i made some very profitable trades without looking at a chart.these are what i refer to as extreme pricings.
when they are in synce you can watch as they all breath together making new highs within there individual daily range,when you have so many instruments all in harmoney ,it becomes much easier to trade and hold trades with confidence.

ofcoarse the market only has harmoney a couple of times a week,so i know when to adjust my trading to suit random market and ranging consolidating market.i could ramble for hours on this.but like everthing in this trading world it takes time to adjust or way of using information ,which = time and thats mosts stumbling point
Quoting MasterGamble
If one pair trends far ahead of another for a few hours the other generally tries to catch up a bit. Especially with the GBP/USD and EUR/USD.

I am not interested in trading the pairs of currency pairs... But it's rather interesting to see they trade the same as currency pairs if they have at least one matching base currency. Same types of patterns and divergences and everything.
not sure if the catching up is true anymore for gbp/usd and eur/usd. There used to be a correlation, but if you look at your daily chart, since beginning 2011 eur/usd made a dive while gbp/usd just remained in a range.

Well, obviously they both together must trade like a currency pair. It's called eur/gbp. It's simple high-school maths to bring gbp/usd and eur/usd together into one pair (eur/gbp):

1,25769 / (eur/usd) = 1,58738 / (gbp/usd) =>
(1,25769 * usd) / eur = (1,58738 * usd) / gbp, cross out the usd on both sides, then you got =>
1,25769 / eur = 1,58738 / gbp =>
1,58738 / 1,25769 = eur/gbp = 0,79231, which is almost the rate eur/gbp ended with on friday (at least on my charts). Obviously if you look at any crosses, they are pairs of majors, like gbp/chf, eur/aud, aud/cad,... (and of course they move like pairs, cause they are pairs).
Quoting Custos
not sure if the catching up is true anymore for gbp/usd and eur/usd. There used to be a correlation, but if you look at your daily chart, since beginning 2011 eur/usd made a dive while gbp/usd just remained in a range.

Well, obviously they both together must trade like a currency pair. It's called eur/gbp. It's simple high-school maths to bring gbp/usd and eur/usd together into one pair (eur/gbp):

1,25769 / (eur/usd) = 1,58738 / (gbp/usd) =>
(1,25769 * usd) / eur = (1,58738 * usd) / gbp, cross out the usd on both sides, then you got =>
1,25769...
i agree somwhat with the gbp and euro not being as correlated as they used to be,but having said that,when the overall market is in harmoney,which generally is much less than when it is very random and chaotic,they all work together,not pip for pip,yes we still have the stronger gaining accordingly,which in the £ e it shows in that cross.but to watch this across all my pairs is like an orchestra playing.they all build momentum together,peak and fade ,like watching waves in the ocean.

basically im watching doller strenght yen strenght and risk on or off,and the most desired currency within the whole.this will be the leading currency .when that becomes exausted the others will also.then a new market phase begins,it all becomes ununiformed,
  • Post #5
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  • Last Post: Sep 2, 2012 8:25am Sep 2, 2012 8:25am
As for the arbratidge oppurtunities,yes they are not as abundant as they once were,but they still happen on occasion.

a simple example to get my point across,a news release relevent to uk,can see a drop of 70 80 pips,a gap down although the chart shows a uninterupted candle,but none the less a gap in price,lack of liquidity,generally a spike will also be seen in correlated pairs but not always ,i see this in the value changes and more often than not a high percentage trade can be made as the diference in extremes meets in the middle,hence cable retraces as liquidity comes back and the correlated pairs fall in price to bring price back to efficiency.

theres lots of gems in these related crosses
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