I recently checked my long trade at EUR/GBP and got an interesting idea. I wanted to share with you not only about the mechanics & reason behind my trade but also about the currency correlation between USD, EUR & GBP that can some-how works in my favor. (Assuming we see some "Weakness" in USD when Market reacted to the Fed statements).
The Trade : In this particular trade I'm using a very simple strategy that I developed called S M Fibs, which basically a strategy that is using Structure, MA, and Fibonacci as its combination of rules. I also required a supportive higher time-frame bias (uptrend on ) in order to take this trade. Entry, SL and TP are as seen on the chart.
The Currency Correlation : We know guys that USD and EUR overall correlated negatively (similar with the USD and GBP) that means we can expect the price of EUR and GBP to rise if the price of USD is going lower. Now, keep in mind that the level of negative correlation between EUR and USD is higher than the one on GBP and USD, because of that statistically speaking we can expect the EUR to move higher than the GBP when USD move lower. That would be translated into EUR/GBP going up which means helping me to reach my target.
So, that's it for today guys. Hope this one's helpful as well as educational.