Hello Francis

On October you said that GBPUSD is heading via an inverse HVF to 1.26839.

Overlay the weekly GBPUSD chart with the weekly CLC1 chart you published today. You will see they are similar, with peaks and troughs at the same time. A high degree of correlation.

The main differences are that GBPUSD dropped more in March 2010 and CLC1 rose more in April 2011.  However, they are both correlated with higher highs and lower lows in the same place. See chart.

How can it be therefore that GBPUSD will go down and CLC1 will go up?

Thanks

Rob

PS Rob also attached a chart which is great to see!

Here it is below.

My Answer:

Hi Rob,

The Inv HVF has not been triggered, the pattern can still break to the upside. The pattern is only deemed ‘confirmed’ on a high momentum break of a RL3/RH3..

The key element is the Dollar and it is likely that if $ weakens both the GBP & Crude will move in the same direction… but if fear returns and deflation  worries return over ‘Risk on’ then they both could be down.

I am more of an inflationist so long run expect both Oil and GBP up… however during recent $ strength it was worth highlighting if a downside break where GBPUSD may end up.

Great question incidentally and will post it assuming you don’t mind, as others will wonder about the correlations.

Regards

Francis