Currency Correlation

Currency Correlations, Part I

A short video introducing traders to the subject of currency correlations.

Currency Correlations, Part II

The second video in a two-part series on currency correlations.

you give me so much importance it's my pledge my question is so simple if eurusd is going up so silver go up either eurusd is going down so silver follow it and go down ?

i read what u suggest me it mean that gold silver are follow audusd pair????

Originally Posted by lion of gail

you give me so much importance it's my pledge my question is so simple if eurusd is going up so silver go up either eurusd is going down so silver follow it and go down ?

Yes but ... with some probability ... you can look at the image/table on this post : positive correlation with SILVER are having EURUSD and AUDUSD (with some probability less than 1), and negative correlation is having USDCAD (means - if USDCAD is on uptrend so SILVER is on downtrend). ... but with some probability too

Originally Posted by lion of gail

i read what u suggest me it mean that gold silver are follow audusd pair????

It is article ... AUDUSD is having positive correlation with gold and silver, and USDCAD is having negative correlation with them (with some probability for example).

You can always open gold (XAUUSD) or silver (XAGUSD) charts in MT5 and check it using MFCS_Currency_Correlation_Chart indicator from this post. may be - there are some indicators for MT4 to check it ...

thanks for help but i want one source which one follow by silver if any currency or index if u know so please share here

Talking Points:

• Correlations are useful to find direction for a variety of markets.
• Oil and the USDCAD have a negative correlation.
• Once direction is found, plan your trading strategy for another asset.

Understanding market correlations can allow traders to have an option on a commodity based off of the direction of their favorite currency pair. The idea is to take two seemingly different markets or assets and see how market price moves relative to each other. Today we will review using the USDCAD currency pair to determine the direction of USOIL (WTI) through the use of a correlation.
Let’s get started!

Oils Correlation

When someone mentions Oil, currency traders should immediately think of the USDCAD as a correlating currency pair. These assets are negatively correlated meaning they generally can be seen moving in opposing directions. This occurs because the USDCAD quotes the price of Canadian Dollars in terms of USDollars. USOil represents Oil per barrel priced in terms of US Dollars. With the USD being on opposing sides of each equation this means that the two assets will move in opposing directions when the USD strengthens or weakens.

Secondly, the CAD has a high correlation to Oil due to Canada’s extensive oil deposits. Most of this oil is purchased by the US causing a transfer of funds along the way. As oil prices fluctuate, this increases or decreases the amount of funds transferred from USD to make purchases of Canadian resourses. These transfers essentially change demand for the currency and can directly cause changes in the USDCAD currency pair as well.

Learn Forex – AUD/USD & Gold (XAU/USD) Correlation



Trading the Correlation

The key to trading negatively correlated assets is finding a direction or having a fundamental opinion from one of the underlying assets before making a trading decision. If traders are seeing the USDCAD push to higher highs, this could easily be the catalyst for a bearish bias on Oil. Conversely if Oil is trending upwards traders would have reasonable expectations of the USDCAD traveling towards lower lows.

As you can see, this information is very useful to traders that already have an opinion on either Oil or the USDCAD currency pair. Often traders that are bullish on Oil choose to trade the USDCAD instead of the metal itself. The Canadian Dollar carries a 1.00% banking rate, meaning traders can earn additional interest while trading a bullish bias on Oil. If a trader is bullish on the USDCAD currency pair, traders can in turn sell Oil to avoid accumulating interest on their trading balance.

---Written by Walker England, Trading Instructor

More...

please refer some indicator which indicate trend of silver

Trend for silver? XAGUSD?
Ichimoku ... this indicator may indicator the trend for anything

Example.

H4 - flat within primary bearish :

D1 - it was flat with bearish just started :

H1 - flat, Chinkou Span is crossing historical price from above to below to reversal from bullish to bearish :