FOREX THEORY
How Cross Currency Pairs Affect Dollar Pairs (Part 2)
This is due to the currency crosses! In this particular
example, EUR/JPY.
When USD/JPY broke through its major resistance level, the
combination of stop losses being hit and breakout traders jumping on the
bandwagon pushed it even higher.
Since buying more USD/JPY weakens the yen, this would cause
EUR/JPY (and possibly other yen-based pairs) to break through its major
resistance level, once again hitting stops and attracting breakout traders,
pushing EUR/JPY even higher.
This causes the euro to strengthen and slows down the
descent of your EUR/USD trade. The EUR/JPY cross buying acts a “parachute” and
this is why EUR/USD didn’t move as much or as fast as the USD/JPY.
So even if you only trade the major currencies, cross
currency pairs still have an effect on your trades!
 This is due to the currency crosses! In...){kind=link}
0 comments