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Correlation

Short/medium term correlation between BTC and stock indicesSo, I was stating yesterday that one of the reasons why BTC turned unexpectedly bullish, is the strong performance of stocks, especially tech stocks. That makes me believe that many treat BTC as a tech asset, especially CBOE and wall street players. So, we see the correlation on shorter timeframes is definitely there, even though it is a bit delayed. The overall structure is quite similar, and the global trend also. First downtrend, then uptrend, and the ellipses show that the larger pumps and dumps in NASDAQ can also be found in BTC. Many expected a strong dump this year in stocks, but instead stocks are just continuing to pump. And the large supercycle yearly picture for stocks shows that this can go on for another 10 years until some larger correction (crash) can take place: There is also some correlation on longer timeframes, I'll soon release a chart on that comparison.
TVC:NDQLong
by SebastianofMoon
6
USDMXN leads USD devaluationI like to plot USDXXX and XXXUSD against DXY or Equally Weighted USD Indices like the EWI I prefer because then you can tell if the USD is devaluing faster than the other currency of the named pair, in this case MXN. First thing I notice is the strong correlation. Even though quoted in USD a pair does not have to correlate that strong if the other currency is volatile as well. I have added a correlation coefficient (cc) indicator below the chart. Above zero means positive correlation. You can also tell from the cc indicator that USDMXN and DXY correlate positive most of the time, also called strong positive correlation. There is even some divergence between the two charts, as indicated by the disjointed angle drawing. Concluding that it is expected USDMXN to drop more than DXY, which I have indicated with the darker red arrow. General disclaimer applies....
Short
by Deep-Peat-Shark
USDCAD - OPEC Meetings, Positive Correlations & Shorts So beginning with fundamentals, this is going to be an interesting pair to watch this week with the OPEC Meetings as well as the crude oil inventories on Wednesday. The discussion on oil being the most volatile topic as the OPEC represents 40% of the worlds oil supply alongside other news events such as FOMC talk and various other data releases. Doing bit of research on oil, I found something quite strange and intriguing. So if you are unaware of the correlation between Gold and USD, being a negative correlation i.e when the dollar strengthens, the price of Gold drops. The same goes for the commodity oil and the US dollar. HOWEVER, in recent times we saw both the DXY and Oil prices rally higher. Now this rarely occurs and if I am not mistaken, this positive correlation we saw was the 11th time in history that we've seen this. With that in mind, I was slightly hesitant on whether or not the positive correlation and rally higher would continue, but it seems to have been a temporary correlation and 'trend' if you will, seeing prices of oil surge from $63.25 per barrel to $64.69 at the time of writing this article, as well as we've seen the dollar weaken and USDCAD tank to the downside. I am going to come back to this but I'd like to jump into the technicals. So starting on the weekly timeframe and looking left to the beginning of 2016 where we saw a massive impulsive downside move, we can see we have been making lower high swing points in the bigger picture. These impulsive moves are accompanied by a slow & steady retracement to the upside, creating new lower highs followed by another impulsive move and we can now expect a similar move potentially. So what we are able to see is at the beginning of September 2017, we began ranging in a corrective ascending channel. Dropping down to the daily timeframe we can see multiple higher highs and higher lows being created. However, around the 7th of March we created a 3 pin pattern signalling a reversal and a new lower high created with an expected lower low to follow. We also had the rejection of the 71% Fibonacci level in the green block annotated " 61.8/78.6 Retracement Zone " with the bottom being the 61.8 and the top being the 78.6 Fibonacci level. Putting the EMA's on, we can see the bearish crossover on the daily timeframe and lower as well as the break below the EMA's. The descending trend line is also being respected as well as the counter ascending trend line was broken, retested and price spiked to the downside. I currently have a short running from 1.33745 with +/- 65 pips profit and risk free. We have also managed to close below the monthly key level with substantial bearish pressure and I expect further decline with CAD strength coming into play with OIL rising and the DXY (Dollar Index) set for a decline. The green rectangle is an area of support I'd like to see broken before a further continuation of price going lower. Jumping back to the research and we can see that we've reached our yearly high and we are due for a pullback however price is still surging prior to the OPEC Meetings. I am short on USDCAD as of now but I will be vigilant of the volatile news as well as having read various reports stating the oil market is over supplied and is due for a drawback/retracement. There are also reports of Venezuelas halted operations and supply losses from both Venezuela and Iran and if this continues we can see downside for oil, which we have been anticipating for quite some time. This would also pull USDCAD higher in the process but I do not see this happening as of yet with the DXY playing out as expected, seeing the Dollar weaken. I will be posting my oil chart after the article to my ideas to use in alignment with USDCAD. Remember, there is a NEGATIVE correlation between the two and always remember risk management and only trade in alignment with your own analysis and never follow blindly. Thank you for reading and have a great trading week further !
Short
by KeownArcher
1
This is what I mean when I say Litecoin OutperformsHere we have Litecoin in black against a bevy of other cryptos including Bitcoin, EOS, Monero, and Ethereum. As can be seen, it wasn't doing great compared to its peers before the September and November 2018 setbacks, but since then has outperformed all o its peers. Keep in mind though, these cryptos, nearly all relatively liquid cryptos really, are cointegrated. Don't confuse this with correlation. Correlation can tell us that when one asset or variable moves in one direction and another moves in that same direction, that the two are positively correlated with one another and if they move in opposite directions that they are negatively correlated. But these cryptos are doing that arn't they? Yes they are, but they are also deviating from one another more and more as time goes on. This is cointegration and it can tell us which is not if they are moving in the same direction, but that the degree to which the variables (cryptos, currencies, or other assets) are sensitive to the same average price over a period of time. So what on earth is the relevance of this you may ask. The point is that something, we don't really know what, is impacting all of these currencies at the same time as they are all positively correlated against the US dollar and they are also cointegrating meaning. What is that hidden variable? It could just be Bitcoin as it has been arguably the 'market leader' as the main crypto most known and traded. Just take a look at this link and scroll down to the crypto correlation chart of 2018: cryptocurrencyhub.io Every crypto pair was highly positively correlated with one another in 2018, almost all of which were between 90 and 100 percent. That is actually quite unheard of in financial markets where an entire asset class is related to one another. Surely we can find correlations and cointegrations in other places in the market such as bond yields. In the US or Germany or Brazil, the 1 year, 2 year, 5 year, and 10 year bonds are all positively correlated with one another another and cointegrated with one another as well. Except, the difference is that it only holds for a single country. Sure, maybe a few countries are more closely related to one another than others, but not the entire market. So what are the takeaways then? First, a 'diversified portfolio' of cryptos is not diversified at all. All it will do is let you know which ones are the winners and which ones are the losers which we already know from the chart starting right at you above. Then what do you want to do? Look if you're an investor, like a real investor not a crypto bro, then yeah sure maybe have a high performing crypto in your portfolio. That crypto in 2019 is Litecoin. Period end of sentence. Yes maybe this could change, but right now its Litecoin. Nothing else to say beyond this. If this changes, I will be the first one to scream it from the mountain top, but really nothing can be said to convince me that a portfolio with fifteen cryptos is any smarter than one with just the good ones. Please please please tell me if there is another crypto out there performing much better than Litecoin and I would be more than happy to give it a look, change my worldview, and incorporate it into my analysis. I challenge you to do so. Good luck trading out there. Also if you are enjoying my honest analysis the way I see it, please take a look at my other content at www.anthonylaurence.wordpress.com
BITFINEX:LTCUSD
by WhiskeyTangoFoxtrot3
Correlation Trading EUR/USD/ DAX/ OIL/ GOLDHey guys, after a time of inactivity I"m back. Today I show you how you can trade EUR/USD with the help of correlations. You can see in the chart positive correlations and negative correlations. Be careful the arrows on the chart are no trend direction. If for example Oil change its direction the trend direction is turned. But be careful with long term-trends and short- therm trend. Always be aware of your timeframe. (4h is short therm trading) Hope I could be informative for you guys
Education
by perc_growth_everyday
Correlation EURUSD VS. USDCHFHere is my two yestarday´s levels from my Members area. ( Both ended up in profit ) Let me explain my how correlation between EURUSD and USDCHF works and how you can look at the charts. EURUSD and USDCHF are negatively correlated (correlation almost -100%). If USDCHF falls, then EURUSD should rise. If EURUSD rises, USDCHF should fall. This means that in similar areas there will be similar levels for trade. HOW THIS CAN HELP ME IN TRADING? If you consider some price level for trade make sure that is visible on other pair too... If will be significant area for long on EURUSD, make sure that there is a significant area for short trade on USDCHF too! If there is, then you will be more likely to have a successful trade. Happy trading Dale
Education
by Trader_Dale
Correlation Coefficient + CCIPictured above is a graph of Royal Dutch Shell vs brent crude, the correlation coefficient between them, and the commodity channel index tracking the volume weighted moving average of Shell. I tested this indicator on a few energy stocks: RDS, MRO, BP and XOM. Negative correlation between brent crude and an energy stock coupled with an overbought CCI seems to give an indication of price reversal. Here we see two overbought CCI readings coupled with negative correlation, both followed by massive drops in the price of BCO and RDS. Likewise we see negative correlation coupled with upward CCI readings pointing to massive price rises in RDS. Seems to work on daily time frame as well but indicator length will need to be tweaked accordingly. Correlation coefficient going negative is an indication of pricing inefficiency and momentum potential, but does not give us an indication of price direction. The commodity channel index can give us a sense of where price momentum is pointed. Both put together give us a powerful indicator capable of foreshadowing both momentum and direction.
REducation
by Derivati_Capital
Average price of bitcoin against the American stock marketSince I'm lazy, here's what I said on twitter: "Due to the stock market opening lower than it closed yesterday, this chart that takes into account the average price of #bitcoin against the sum of $DJI $NDX and $SPX opened exactly at the 200 day moving average, rising as the day progresses... A $BTC target ~$13k based on this" I've been noticing clear inverse correlation with the American stock market and bitcoin(along with the inverse correlation with DXY). After realizing it was possible to form charts out of formulas using other charts as variables, I decided it would be very interesting to weight the American stock market against the average price of bitcoin across the 10 most significant exchanges according to me. Unfortunately for the no coiners, I've been anticipating a significant recession that adds fuel to the next bitcoin bull run(see related ideas).
BITFINEX:BTCUSDLong
by tomtourettes
1