timwest

Long Aussie Dollar (FXA) versus Short S&P500 (SPY) Pair

BATS:FXA   Invesco CurrencyShares Australian Dollar Trust
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4
This picture is worth a thousand words.

Isn't it amazing when a currency is as volatile and as directional as the S&P500?

I'm sure you have all seen this somewhere in the media, but thanks to Tradingview we can see just how tightly intertwined markets are.

Sorry I don't provide much more insight into this pairing, but sometimes just plain old "statistical arbitrage" comes into play whereby you find two markets that correlate and wait for them to get out of line with each other and then place your trade.

Lately, Australia has had some softening in its economy and it has dragged down its currency.

Last week's wide-ranging, outside-bar (a.k.a. "engulfing pattern") in the FXA is one positive to indicate an entry into the position.

Cheers.

Technical Tim Monday, September 10, 2012 5:07PM EST
Subscribe to my indicator package KEY HIDDEN LEVELS $10/mo or $100/year and join me in the trading room KEY HIDDEN LEVELS here at TradingView.com

Comments

This pair is working finally after having a 3% drawdown initially. Now the trade is up 3% for a 6% rally in this pair in the last two weeks.
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Followed.
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Very interesting.
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Followed.
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Agreed.
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Agreed.
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Perfect ! just got home and have the same signal !
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Agreed.
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Agreed.
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