Spread Day: Opportunity on Gold vs EURUSD
Updated
I was looking for some spread opportunities to have fun with reduced risk trades. Possible opportunity relies on Gold/EURUSD spread.
The week started with Gold losing 0.8% and EURUSD losing 0.10%, trading around its 20 Period SMA. I plotted XAUUSD chart and overlapped it on the EURUSD chart (using 4h candles).
I found one interesting shared support ($1509 for Gold and 1.1084 for EURUSD) and one interesting shared resistance ($1601 for Gold and 1.1238 for EURUSD). Furthermore, you need to know that Gold and EURUSD are usually positively correlated (if one is UP, the other one is UP too). However, in the last weeks, the correlation did not hold, and the two securities started to be again positively correlated over the previous five days (Green vertical line).
In that situation, we can analyze the spread between the two securities and, if the spread is trading near the limit of normal Standard Deviation (represented by Bollinger Bands), we can buy an asset and sell the other asset.
In that graph, I represented the Gold/EURUSD Spread. The spread is currently trading around its 20 Period SMA (Purple Line). In that case, we would like to buy Gold and sell EURUSD. The ones of you able to manage risky spreads will preferably enter in that situation immediately, the "side-watchers" will prefer the opportunity to form perfectly (and it happens when the spread price reach the orange curve level).
By the way, even if in this situation, I would like to enter the trade. In the graph below, you will find XAUUSD on the left and EURUSD on the right.
MACD shows possible reversal during the current week for Gold and Consolidation or even reversal during the current week for EURUSD.
Finally, remember that spread trading is used to make a gain on the spread difference between two assets. (No speculation on assets, but speculation between their average spread).
Don't forget to like this idea and to follow me. If you have doubts on spread trading or similar topics, don't hesitate to contact me privately.
Disclosure: My ideas contain statements and projections based on assumptions on capital markets, and therefore inherently subject to numerous risks and uncertainties.
Before buying or selling any stock you should do your own research and reach your own conclusion or consult a financial advisor. Investing includes risks, including loss of principal.
I am not a financial advisor.
The week started with Gold losing 0.8% and EURUSD losing 0.10%, trading around its 20 Period SMA. I plotted XAUUSD chart and overlapped it on the EURUSD chart (using 4h candles).
I found one interesting shared support ($1509 for Gold and 1.1084 for EURUSD) and one interesting shared resistance ($1601 for Gold and 1.1238 for EURUSD). Furthermore, you need to know that Gold and EURUSD are usually positively correlated (if one is UP, the other one is UP too). However, in the last weeks, the correlation did not hold, and the two securities started to be again positively correlated over the previous five days (Green vertical line).
In that situation, we can analyze the spread between the two securities and, if the spread is trading near the limit of normal Standard Deviation (represented by Bollinger Bands), we can buy an asset and sell the other asset.
In that graph, I represented the Gold/EURUSD Spread. The spread is currently trading around its 20 Period SMA (Purple Line). In that case, we would like to buy Gold and sell EURUSD. The ones of you able to manage risky spreads will preferably enter in that situation immediately, the "side-watchers" will prefer the opportunity to form perfectly (and it happens when the spread price reach the orange curve level).
By the way, even if in this situation, I would like to enter the trade. In the graph below, you will find XAUUSD on the left and EURUSD on the right.
MACD shows possible reversal during the current week for Gold and Consolidation or even reversal during the current week for EURUSD.
Finally, remember that spread trading is used to make a gain on the spread difference between two assets. (No speculation on assets, but speculation between their average spread).
Don't forget to like this idea and to follow me. If you have doubts on spread trading or similar topics, don't hesitate to contact me privately.
Disclosure: My ideas contain statements and projections based on assumptions on capital markets, and therefore inherently subject to numerous risks and uncertainties.
Before buying or selling any stock you should do your own research and reach your own conclusion or consult a financial advisor. Investing includes risks, including loss of principal.
I am not a financial advisor.
Trade active
Trade closed: target reached
Trade could be closed with profit.
Related publications
Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.