In the last post we discussed what a parallel strategy was. Today I would like to discuss the inverse strategy.
The inverse strategy is a little more complex to the parallel strategy as it requires trades moving in opposite directions. So, what is required for this to work is the base and counter currencies on the first pair to be directly opposite to the second pair. Let's take a look at some examples of that.
- EURUSD and USDCHF
- GBPUSD and USDJPY
- AUDUSD and USDCAD
In all three of the above examples, the first pair has the Dollar as the counter currency and the second pair has the Dollar as the base currency. So if the Euro strengthens against the Dollar then we will generally see the Dollar weaken against the Swissy.
The parallel and inverse strategies can be easily identifed almost every morning on the Dynamic Trader Forex Toolkit under the Daily Pivot Points.
Read more daily forex analysis here.
Good trading.
FX Analyst
Anne Chapman
