Very interesting phenomenon in EURUSD and Gold

Good day all,

A few days ago, I noticed something very interesting on my chart station. I was looking at a chart of gold for trading set-ups. After a while, I moved to a chart of the EUR/USD currency pair. I looked at EURUSD using different time frames. Slowly, I felt a sense of familiarity – a sense of deja vu. A mammoth pattern of some sort seemed to appear on both the charts of EURUSD and gold. Take a look at the charts below.

 

Allow me to say this: both charts are more or less very similar-looking! Yes, the time frames for each instrument is different; apart from that, price action is very similar! Look at the first two charts. We see a long-term run-up in price for both securities. Then, we see 5 subsequent waves.

So what does this mean? Does it mean that gold and EURUSD share some kind of near perfect positive correlation? Of course not – the massive zig-zag pattern on each chart took different time frames to form. The inverse relationship shared between the US Dollar and gold is for a fact (except during certain periods of time). And since EURUSD possesses the US Dollar factor, we can conclude that there may be some form of correlation between EURUSD and gold (I would prefer to do more analysis before ascertaining this). Since the charts are of differing time periods, we should still be shocked or surprised to some extent!

Fundamentally, I am not suggesting anything between the two securities. Technically, I am very intrigued by this phenomenon because of how massive the patterns are. It is not the same as comparing two plates of rojak! The number of waves were the same, and this is following a huge run-up. Even though I am not suggesting any sort of trading opportunities whatsoever, I am going to monitor the two securities and see what happens. For me, I am looking at the possibility of some sort of  chart pattern that I can then trade on in future. In other words, “founding” a pattern. There is a chance it is actually some sort of Elliott Wave pattern. Look here for examples: http://thepatternsite.com/Elliott.html

All analyses, recommendations, discussions and other information herein are published for general information. Readers should not rely solely on the information published on this blog and should seek independent financial advice prior to making any investment decision. The publisher accepts no liability for any loss whatsoever arising from any use of the information published herein.

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