Hi Markulet.
This is an interesting subject to me, the intercurrency relationships. And let’s get one thing straight. I’m no expert. But, I can only tell you what I have uncovered up to this point. When I look at the market, I am more interested in how all the different currencies relate to one another than say following price action, indicators, volumn, etc…So, that means I keep track of each of the currencies and make correlations. And I base my trades off of that kind of data.
Now, to try to address your questions.
In my opinion, I don’t think it means a whole lot when a pair reaches parity. Now, maybe to the fundamentalists out there doing much research for a longer term assessment, sure. But not to the technical trader. We see it come and go, and, yeah, that’s nice. There’s much paying attention to the trend watch, S & R levels, Fibs, etc…
Now, when you say if AUD/CAD gets to parity, it surely won’t stay there for any length of time. Sure, it could be a resistance level (kinda like we see when pairs reach a round number). But, if (when) it does, then I don’t think there will be any real similar fluctuations between the USD/CAD and AUD/USD. See, all the things that make the AUD, the USD, and the CAD move, as individual currencies, are different. There’s so many factors involved that they cannot possible move in tandem. Let’s look at them. The AUD. When copper is rising very much, that will have an affect on the AUD. Also Gold. They are one of the biggest producers of Gold in the world. Also you have to see where their central bank stands. Maybe they want a devalued dollar, which will help with their bottom line. And the same thing goes with the CAD. We know when the price of Oil does down, that affects them. They are one of the biggest producers (relatively speaking).
So, over time, there’s changes happening. And to some degree there will be a divergence. And I don’t think there’s a way to exploit any kind of direction given the fact of reaching parity from one of the pairs.
That’s all technically speaking. Fundamentally…I’m sure you would have to be looking at a very long term analysis.
But, this is interesting to me, about how the currencies relate to one another.
Remember, I am no expert.
But, I do keep track of them, every day, their %'s and pips from one another, for a couple years going now.
Hope we can continue talking about this subject.
Mike
