Yen Aims to Extend Gains, Pound Focus Shifts Back to Politics. Gold Prices May Find a Lifeline as Market Mood Darkens. Loonie Slides as Crude Dives- USDCAD Recovery Eyes Resistance.

FTSE Further Develops Range on Sharp Turn Lower. Dow Jones Industrial Average Struggles to Hold the Gap Higher. The British Pound Breakdown. The European Debt Crisis.

Stock Market Analysis Tools That Will Improve Your Trading

Stock market movements are watched by casual investors to active traders. Many times, the movements of the stock markets can give clues about potential movements in currency trading.

Below is a table of general tendencies that a trader familiar with stock trading can use to guide them in forex trades. For example, if the stock market moves higher, you tend to see the AUDUSD move higher as investors seek risky assets.

What is the correlation between American stock prices and the value of the U.S. dollar?

Risky assets include the stock market and higher yielding currencies which currently are the AUD and NZD. This is known as a Carry Trade Strategy. For example, if the stock market is in a downtrend, then a currency pair such as the USDCAD tends to move higher as traders buy the USD for its safe haven status.

Regardless of the movement of the stock market, there generally exists a currency which you can buy.

Now, the key is identifying a high probability area to time an entry in the trade. Use levels of support and resistance to identify these key areas with the help of oscillators to indicate momentum. Therefore, a price of one instrument is not always going to move tick for tick with the other related instrument.

How Equities Affect The FX Market

To contact Jeremy, email jwagner dailyfx. Follow me on Twitter at JWagnerFXTrader. DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

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