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Chapter 28, Part I. Intermarket Analysis - Commodities.

Discussion in 'Complete Trading Education- Forex Military School' started by Administrator, Feb 17, 2012.

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  1. Administrator

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    Part I. Intermarket Analysis - Commodities. [​IMG]

    Commander in Pips: In the previous lessons we dug into and investigated purely the forex market. But the currency market is not self-sufficient. It’s a part of the overall global economy. Money is just a tool that allows the world merchant system to exist. Nevertheless, this is a very important tool. All markets are linked with each other in some way, and if something significant happens in the world economy – this “something” hits all markets sooner or later and the forex market is not an exception.

    [​IMG]

    Today we will start to talk about the link between different markets – currencies, commodities, stocks and bonds. Investigation of such links and correlations between markets is called “Intermarket analysis”. In our school unfortunately we can’t discuss absolutely all topics in this huge sphere. So we will point out only basic stuff, later you will be able to develop it itself. If you are interested in this topic, I suggest you to read the excellent book by J. J. Murphy, Intermarket Technical Analysis.

    Pipruit: Ok, let’s get started…
    Commander in Pips: Sure. Today we will speak about link between Gold and the Dollar. In fact, the divergences in moving of Gold and Dollar are very rare and these two assets have quite a solid negative correlation. Just to say couple of words about correlation – I do not want to dive into math here, since that formula a bit complicated, that’s why I will explain you it verbally. The higher the correlation, the more similar assets move in time – simultaneously decrease and/or increase. Correlation could be as positive or negative. Positive correlation means that two assets move in the same direction – when one asset is growing the second one is also growing. Negative correlation means vice versa – when first asset is growing, the second one is falling.
     
    #1 Administrator, Feb 17, 2012
    Lasted edited by : Oct 8, 2016
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