Hello traders! I was a bit hesitant when considering this week’s Lessons from the Pros article, because the topic is very subjective. The difficulty lies in fully explaining the possible interpretations of the following chart, and how what could be a powerful tool for you may be misinterpreted if used improperly. If you are having difficulty with the concept, perhaps bring it up in one of the Extended Learning Track rooms that you are in – it may be easier to grasp the concept when watching this happen live!
This topic concerns the relationship or relative strength of one currency pair with another. No, not one currency vs. another, which is what we usually talk about. But one currency pair vs. another. This is easily visualized by looking at two charts side by side – “they are both going up” or “one is flat and the other is trending.” But our topic this week is the actual strength of one currency pair’s trend vs. another currency pair’s, not the Relative Strength Index – this merely measures a currency pair’s strength vs. its own prior movement.
What I am referring to specifically is when you are looking at two different currency pairs, and are trying to decide on which pair to trade. Both are in uptrends (for example), and both have pulled back to qualified demand zones. Which pair to trade? Perhaps trade both? Or would you rather choose one of them?… Continue Reading
