Cable Update (GBPUSD)
Any trader trading US equities. Think of it in simple terms, you sell US shares so you need dollars in exchange, that drives demand of dollars up. If the demand increases so does the price. (apologies to analysts for the oversimplification). So yes the news is cr@p, but that is reflected in the share prices so it is inversely correlated to the dollar rate.
? Thank you. Now I better understand how the stockmarket affects the currency!
But I dont understand this " So yes the news is cr@p, but that is reflected in the share prices so it is inversely correlated to the dollar rate "
Would you like to explain it a bit better
Would be very thankful!
The nice things about fundy plays like this is that it is cyclical, a sell of in US equities will drive the dollar up as there is a direct exchange, all those traders now with a surplus in dollars will need somewhere to put them as having those dollars is not really a solution either so the second part of an equity sell of cycle will see a flight in riskaversion in currencies, so they will be buying swissy, yen and some even sterling instead. It is fun to watch, just use your technicals to stay on the right side of the cycles.
Very good explanation.
Is there any good way to know if the news are affecting the stockmarket or the currency right away?
Maby a stupid question, but I hope you understand what I ment!
Once again, thanks for great help!
Look at your charts and watch the correlation, not sure what you mean by this question. It is all reflected in the price. And lets be honest yesterday FOMC was a great precursor to today's trade balance, hindsight can be a lovely thing sometimes. It does put things in perspective and reiterates again how the news is manipulated.
?FL, you know as well as I do that you can find any price pattern to match the MACD at any time and there is no direct correlation between simple MACD reversals and price reversals. Traders trading just reversals in MACD as their only signal will never be in profit for long. The only possible use I can accept for MACD is divergence, but even then there are better ways of spotting those sooner and better then a simple MACD can do for you.
