Intro
Due to their respective moves I have been considering the potential for a Short on EURJPY and a Long on USDCHF , independently of each other. However, if you overlay the two pairs an interesting pattern emerges.
Separation Event
In the past year there have been 4 separation events where the correlation has been broken before coming back together. These usually only last ~20 days. The last time this pattern completed was back in early Nov 2020, since then we have seen a massive widening as the two run in opposite directions.
Trade Idea
The trade idea proposed here is on a pretty large time frame, potentially 12 months or more.
EURUSD is close to the inverse of USDCHF which makes me believe the Dollar will be the key factor. How the EUR and USD interact going forward could shape if we see this correlation turn around and move towards another touch.
Due to their respective moves I have been considering the potential for a Short on EURJPY and a Long on USDCHF , independently of each other. However, if you overlay the two pairs an interesting pattern emerges.
Separation Event
In the past year there have been 4 separation events where the correlation has been broken before coming back together. These usually only last ~20 days. The last time this pattern completed was back in early Nov 2020, since then we have seen a massive widening as the two run in opposite directions.
Trade Idea
The trade idea proposed here is on a pretty large time frame, potentially 12 months or more.
EURUSD is close to the inverse of USDCHF which makes me believe the Dollar will be the key factor. How the EUR and USD interact going forward could shape if we see this correlation turn around and move towards another touch.