What happens with this pair ($EUROUSD) is important here in our market, XAO(All Ords.) being a commodity based market. EUROUSD pair and the CRB INDEX(commodities) are positively correlated, more often than not anyway. $EURO out performing $USD can offer a helping hand to the commodities and quality commodity producers as well.
Since the BREAKDOWN in EURO against USD around Mid. 2014 commodities followed suit.
What is unfolding at present ?
At the weekly chart below, main window is the $EUROUSD, second below is the CRB INDEX and in the third/bottom window is the correlation between the EUROUSD and the CRB INDEX over a 20 week period ( about six trading months). It must be noted that looking at the bottom window we can clearly see that $EUROUSD & CRB are positively correlated.
In terms of the EUROUSD PAIR one may sum the price action behaviour of this WEEKLY chart, within a MAJOR DOWNTREND, a TRENDLESS (Trading Range) since March this year. A reaction at the SUPPORT of the TR after what Mr Draghi said is clear.
Until such time that we see a resolution out of this TRADING RANGE,UP or DOWN, one may have a NEUTRAL BIAS between the BULLS and the BEARS in the MEDIUM TERM as far as the $EUROUSD goes.
As for the CRB INDEX, it needs a helping hand from EURO. In other words a BREAKOUT on this front (WEEKLY $EUROUSD) should at least in theory help the CRB INDEX and potentially to our market being a commodity based market. A BREAKDOWN is expected to have the inverse effect off course. But for now, we watch the boundaries of this trading range and wait for it to resolve itself. There is no volume available which I can incorporate in my analysis.
Chart is courtesy of StockCharts.com
Wouldn’t it be nice to see a top charting software like StockCharts here in AU ?
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