Correct averages from Fix prices. Averages is the gateway to many important math formulas to trade profitably such as Regression, Z and T scores, Correlation, exchange rate crossovers, Kurtosis. Averages allow for proper placement of stops and hedges for those that use such methods. But just as easy to view price in relation to averages to determine overbought and oversold levels.
I’ve been checking on JPY correlations this weekend because USD/JPY and JPY cross pairs are deeply oversold and I wanted to know if USD/JPY was correlated to JPY cross pairs for long trades.
Very simple to enter each of the main 7 averages from the 5 day to 253 to obtain a correlation. The correlation is correct provided the proper averages are used. The math professor at vassarstats Dot net not only has the best calculators but offers great tutorials for interested.
EUR/USD
5 day =1.0650
10 = 1.0622
20 – 1.0623
50 = 1.0696
100 = 1.0689
200 = 1.0350
253 = 1.0308.
EUR/JPY
5 day = 141.25
10 = 142.74,
20 = 143.52
50 = 142.65
100 = 142.11
200 = 142.81
253 = 141.76
GBP/USD
5 day = 1.2127
10 = 1.2038
20 = 1.2029
50 = 1.2095
100 = 1.2135
200 = 1.1821
253 = 1.1859
GBP/JPY
5 day = 160.86
10 = 161.76
20 = 162.54
50 = 161.31
100 = 161.25′
200 = 163.15
253 = 163.10
Brian Twomey
BRIAN TWOMEY ON TRADING 