Legs and their effects

Hi,

I predominately trade non US dollar crosses and wondered if anyone had any ideas on deciphering when the legs will be against the cross in question (i.e. sterling/yen), how long for, and how best to react in the situation when the non related cross currency is in control?

For example, this week has been all about the US dollar and consequently, as most of the volume has run usdyen and cable in opposite directions, how best to react, and more importantly, how to be ready, and aware when it stops and reverts to more yen or sterling movements?

Cheers in advance!

Hello Wasp,
FWIW here is how I trade it (or not).
If Im trading GBPJPY I watch GBPUSD & USDJPY at the same time. If cable and UJ are moving opposite directions I personally don't trade it because it is choppy and whipsaws and it is too fast for me to get in and out. But then I'm pretty useless on the shorter timeframes.
Other non USD crosses are much kinder than the yen pairs when this happens and less whippy (EURGBP, EURCHF etc).

If you are on a 30min time frame or less and you are pretty quick at legging in and out I suppose you could trade it by watching which of the two (cable or USDJPY) is stronger or driving the move. You could also then see when they start moving together again and be ready to jump in.

Looking at the currency indexes is also a good indicator, for example the dollar index. Big moves on that would indicate a bad day for non US dollar crosses.
A good example is GBPJPY yesterday (NFP day) when the move was all about the dollar and GBPJPY has printed a daily IB.
New trends for Monday please

Nic

Hey thanks Nic, not thought of watching the dollar index or any other markets tbh as an additional indicator but still hard to decipher, even then, when the moves are not going to be dollar related.

Although, if they are all quiet, it makes sense that non dollar crosses ill pick up in their own direct currencies.

Not sure if this is what you are looking for but here's a Link to an XL sheet I devised a few years ago. It Calculates Fair Market Value for The Crosses based on the Current Value of The Majors.



The Download File is in the post that follows the Linked Post

ps. Maybe a Programmer could create a Dynamic Link to the Majors?
The Constant Inputs required are why I don't use it, on a regular basis, now.

Fascinating stuff. Not really what I was looking for but nonetheless, great alternate info never would have found otherwise thanks.

My prime concern, simply put, is [how to be] assessing and be ready for when a non USD cross, will be moving via one of the primary currencies, rather than the legs (as Elitejets succicently put with the NFP example).