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Thanks for your input, Jose. Coming from you, I consider it most
encouraging. I posted the following on the ET board, if you're interested:
http://tinyurl.com/cogo7
Forgive all the lines.
As David Letterman used to say: Is This Anything? Michael mentioned
EUR/USD & USD/CHF. This is a daily chart w/an 8d correlation. I think
it supports some of what I'm talking about. In the first part of the
chart each market is coming off a long-term trend and they climax and
consolidate and reverse in pretty much classic trading-ranges. Note
during this period from 12/04 to 3/05 there are several sharp
relatively lower periods of correlation (red lines at -0.80ish), then
in Mar when the trends get in gear following lower-highs (USD/EUR) and
higher-lows (CHF/USD) and the ranges break, correlation remains
steadfastly strong at or near -1 thru July and beyond.
In July the first serious pullback/consolidation of this trend, but is
this reversal or continuation? Hindsight is 20/20, but note the still
strong short-term trends which continue to correlate almost perfectly.
Does this mean the longer-term trends will continue? They do briefly
but then in Nov correlation starts to show the first real volatility
since the trends began and price subsequently is certainly ranging
more, even in the short-term it's much sloppier as it tries to break
significant support/resistance. Then last wk serious price breaks
suggesting shakeouts and upthrusts.
So is correlation giving clues as to reversals? Will this work on an
intraday chart, hourly or 15-min? Could one look at correlation
aberrations as clues to standard technical analysis of
trends/consolidations/reversals of higher timeframes which could be
played in lower timeframes?
Just wondering, just exploring...
H
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