FOREX CORRELATION
Who here thinks Dow will fall to 12500 by the end of the day?
I believe the Dow will hit 12500 today. Considering that not only have all support levels for the Dow has been broken, but there should also be mass volatility coming into the market. I also study the correlation between Forex and the Dow. Central banks have strong control over the rate of exchange between countries. For the pass few days, the JPY has greatly appreciated against the USD and the EUR and GBP has strongly devalued against the USD. During these pass few days is also when the DOW faced heavy correction. As of now, the U.S. markets hasn’t even opened, but EUR has devalued a hundred pips and JPY has appreciated over a 100 pip in a matter of seconds. I’ve never seen a move so powerful before. I think this is a strong indication that the Central banks is EXPECTING another severe drop, and this strong movement explains how the Central bank’s expectations are being factored into the price.
Almost there
I think that 12500 is a bit drastic, but yes I do believe that the market will take another dip today. I also believe that everything is cyclical. The US markets were not as good as the foreign markets earlier this year and the moddest drops have not been as severe as in the foreign markets. Another thing that might play a factor is that we have had a weak Dollar for a number of years. And if you are aware of the different support levels then you are also aware that when a big dip happens, it is typical to recover about 50% in a equal time span. But first you must know where the bottom is. By the end of September I expect to see the markets near where they started the quarter. Therefore I am placing additional money into my mutual funds today and more next week after I have paid my bills.
Marcus
Forex Currency Correlation Education
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