A simple way to look at the effects of oil on our pair .
Just for example, consider actual oil doesnt alter in value .
But due to other forces dollar gets weaker .
It takes more dollars to buy tanker of oil.
most oil transactions traded in dollar .
If you live in usa oil costs more dollar .
But if your currency is not the dollar it doesnt take as much say euros to buy the same quantity of oil as it does for Americans.
When you see oil prices going up ,its not exactly correct ,its actually taking more dollars to buy.
Thus we see the correlation to our currency pair,And from my observation it can be a leading indicator of our pair ,if oil lowers in dollar value and continues to stay low it puts pressure on our pair to head lower ,a few negative reports ,hey presto,we on bear train .
Hope this helps .
Just for example, consider actual oil doesnt alter in value .
But due to other forces dollar gets weaker .
It takes more dollars to buy tanker of oil.
most oil transactions traded in dollar .
If you live in usa oil costs more dollar .
But if your currency is not the dollar it doesnt take as much say euros to buy the same quantity of oil as it does for Americans.
When you see oil prices going up ,its not exactly correct ,its actually taking more dollars to buy.
Thus we see the correlation to our currency pair,And from my observation it can be a leading indicator of our pair ,if oil lowers in dollar value and continues to stay low it puts pressure on our pair to head lower ,a few negative reports ,hey presto,we on bear train .
Hope this helps .
making green pips large and red pips small this is my goal.
