Relationship Between Currency Pairs

Beginner Questions Candlesticks, Chart Patterns, and Price Action
1

Today I did another two live trades using GBP/USD 5 min chart and EUR/USD 5 min chart.

I observed strong resistance zone on the GBP/USD 5 min chart and opened a sell order near the resistance level. I opened the order at 1.6140 and set the exit target at 1.6131 (minimum). As I expected up trend was reversal and within short time it hit the target level giving me 9 pips profit. :5: As soon as the position closed a very long white candlestick was formed. This is the longest candlestick ever I seen in 5 min charts.
Time 2.00 GMT

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And also I observed strong support level/zone on the EUR/USD 5 min chart and I opened long order with the bounce. I opened the order at 1.2930 and set the exit target at 1.2938. But the price did break the support level and showed rapid downward move and the same time I observed the large candlestick on the EUR/USD 5 min chart very similar to the GBP/USD 5 min chart. Finally I closed this trade neutral because I could not predict it any more.

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Please tell me what is the relationship between EUR/USD and GBP/USD?

2

Hi there

obviously, they do correlate to some ever changing degree because of the same quote currency in each pair.

Besides that, something a bit more interesting profit-wise is the following

hires

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cheers

3

Hi etfak,

Thank you very much for your reply and please tell me where did you find this chart?

4

can’t remember where and when, most possibly out of an excel file i had built in the early days for checking on individual currencies strength.

nice summary, isn’t it?

5

Yes, it is. Great

6

“Please tell me what is the relationship between EUR/USD and GBP/USD?”

Both of these pairs can be expected to react with some similarities to US dollar News, but each has their own idiosyncrasies. For example, any US News that hints at a tightening of monetary policy in that country would be expected to exert downward pressure in both pairs. However, that would be mitigated between the two pairs by the general market expectation of interest rate rises in the Euro zone and Great Britain. Studying the fundamentals underlying currency moves is definitely part of the curriculum for new traders.

7

Actually there is no way to make cross pair analysis as it gonna lag in time. According to simultaneous intercrossing effect between pairs (I heard about from Hotforex webinars) you can see changes in both pairs which will tell you only that they are depend on each other in current time, unfortunately not in future. I would suggest you to to break intraday period into three sessions (Japan, London, New-York) and try to get and apply trading pattern you’ve seen on japan session ( for example breaking resistance on USD/JPY) and impose it over london or new york sessions. Doing so there will be much more chances to predict, as trading reaction is something about template…