Predicting the EUR/USD by using Currency Correlations
I saw many folks speaking about correlations and how powerful they are, so because the EUR/USD has become easily the most popular pair traded, the Dollar index is probably the most correlated with the EUR/USD.
The http://en.wikipedia.org/wiki/U.S._Dollar_Index, is almost exactly the opposite function of the EUR/USD movement, so what I did is I produced an indior which shows you that the Dollar index, but because the USDX is that the reverse of the EUR/USD, I just inverted it, so now it shows that the EUR/USD very well.
My question to correlation traders is: How can you make the most of this? Can you call the EUR/USD to have atleast a edge by making use of the Dollar Index?
Can Be divergence trading possible here? Other observations If anyone among you're using currency correlations, and are expert in them, I would like you to discuss how do you use the USDX?
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This is my own made Dollar Index indior:
As you can see its almost exactly the opposite of the EUR/USD, so I inverted it, so the reverse looks similar to this:
it's following well the price action:
So what do you think guys?
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