Replies to post #38623 on Simple's Green Room

[maximus1]

Correlations sometimes betray. Ask yourself why would the EUR's relationship to the GBP have anything to do with the GBP's relationship to ANY currency (other than a cross)? Where does the JPY fit into the equation?

Unless you are comparing the EUR/JPY vs the GBP/JPY then you have something (except the EUR/GBP has around 80% of it's relationship based upon the USD).

Remember the 80/20 rule and don't bet on 20/80.

GL,

Max

[simplegreen]

GM board...pennies the relationship between EUR/GBP and the beast is a complex issue but I use EUR/GBP to determine movements of the beast and GBP/USD.
The complexity stems from the fact that the Yen is in the equation.BGP/JPY is basically a synthetic pair...IOW if you have a US dollars account and go long on the beast then your transaction is to buy GBP/USD and sell USD/JPY..this cancels USD and leaves a net long on GBP/JPY.EUR/GBP helps me measure the strength of the Euro and the pound at any given time as well as a glimpse of EUR/USD.The beast does not correlate perfectly with GBP/USD but usually correlates with trend direction so EUR/GBP is what I keep my eye on.
As I said...its a complex issue but it works well for me