As the stock market has fallen over the last few days, various currency markets have been quite resilient. Their relative out- performance creates a logical trade.
Here is the chart of the Australian dollar where you can see how well it has performed:
The S&P 500 on the other hand has been quite sick. It is now in an oversold territory but the primary trend is still up. [Buy it on Monday]
In the meantime the DJIA has under-performed so it is the better long position:
So if we look at the YM contract directly against the A$ we get this:
It’s a good pair with a 4 month average R = .5
