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The Trader Advantage: Major Pair Separation
Excerpts taken from The Trader Advantage Program
The major pairs have lost their correlation to each other during the last few day of trading, with the Eur/Usd dropping 140 pips, while the others have held still. In the case of Usd/Jpy and Usd/Chf however, there were some of the most volatile intraday moves ever seen as stand-alone price action in the previous session, that ended up as net sum gains.
Usd/Cad is in a similar situation; the pair gained only 80 pips over the last three trading sessions, but still managed to form a swing point low that could drive the pair up to the 1.0450 area.
On the other end of the spectrum, we have the aussie, which held almost heroically over the last few trading sessions near a resistance trend-line that dates back since November. Aud was the only major currency that gained ground against the U.S. dollar during the last Asian session of the week.
Very rarely does the currency market trade in such a divided manner, and when it happens, it does not tend to last very long. The pattern of trade normally is for major currencies to be following dollar index strength or weakness, with the regional plays being something obscure that is happening in the background, and something that then leads direction that others build into, or is ignored within a session.
The last few trading sessions have shown that this pattern has changed, with the regional growth story taking the main headline. Now the question is how long this will last, and what currencies will prevail. The weakest major recently has been Eur/Usd, in the mid-term it has been Gbp/Usd, and they may be giving clues as to what is to come.
As the final session of the week comes into view the 4 Hour charts are starting to reveal some solid looking swing points, that only need a couple of closes either way to trigger a move. We highlighted Short Eur/Usd yesterday as the first of the 4 Hour signals to hit, and it followed through with a break of 1.3690.
The really interesting part is that no other pairs have followed euro and have not signaled yet, which leaves us lots of opportunity going into Friday, and into next week.
The numbers we are looking to see a close around on the 4 Hour charts are; 1.5200 on cable, 0.9170 on aussie, 1.0150 on cad, (no idea on yen), and 1.0550 on swissy.
This is all about the technical plays right now; only Canada has economic releases of note, ahead of next week.
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