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Equities will gain, as the USD starts to weaken

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Taking the entire picture into consideration is sometimes difficult to do. Knowing what relationships are playing out and when, can leave a lot of people wondering where to even begin. There’s an easy way to do it though. Keep in mind that the correlation of relationships tends to ebb and flow with time and relevance.

The

inverse relationship between the EUR/USD and the USD/CHF is a strong one that has a lot of potential. Often one will lead the other or one will find

Resistance against appoint and then the other will find support at its next support area.

Lately the correlation between the EUR/USD and the DJIA has been in play. As investors pull pack risk appetite they leave risky stocks and head to treasuries. This drives the USD higher, thereby lowering the EUR/USD pair.

As investor begin taking on more risk they will leave the Treasury and got to

Equities. There by weakening the USD and pushing the EUR/USD higher. Taking this into consideration in the last few days paid off as I spent time before high equity risk times on the sideline. There was bid speculation on the Geitner plan that didn’t come to fruition.

Equities folded in the aftermath, leaving the EUR/USD vulnerable and attacking lows form the last few days. If the tests to the downside hold and equities gain over the next few days then, We can expect a supported EUR and a higher pair.

It appears that the DJI will close slightly over it’s opening price today. The next event risk is tomorrow’s

EZ data releases

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*Risk Disclaimer: Trading foreign exchange on margin carries a high level of risk, and may not be suitable for all investors. The high degree of leverage can work against you as well as for you. Before deciding to invest in foreign exchange you should carefully consider your investment objectives, level of experience, and risk appetite. The possibility exists that you could sustain a loss of some or all of your initial investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with foreign exchange trading, and seek advice from an independent financial advisor if you have any doubts.

Hypothetical versus Live Results: Always assume that results shown in articles on this blog are hypothetical results. If they are not hypothetical results, they will be clearly and un mistakenly identified as "live account" results. Otherwise all studies, script analysis, trading strategy analysis and other results are HYPOTHETICAL RESULTS and not traded on a live account.

** “Hypothetical performance results have many inherent limitations. No representation is being made that any account will or is likely to achieve profits or losses similar to those shown. In fact, there are frequently sharp differences between hypothetical performance results and the actual results subsequently achieved by any particularly trading program.

One of the limitations of hypothetical performance results is that they are generally prepared with the benefit of hindsight. In addition, hypothetical trading does not involve financial risk. Variables such as the ability to adhere to a particular trading program in spite of trading losses as well as maintaining adequate liquidity are material points which can adversely affect actual real trading results.”