Greetings!

Today’s title comes with a story for you!

“CVJ!…What does Switzerland, Belgium, and Chocolate have to do with trading?”

(Yes..I heard the “CC”s” too…I have named them…the critics I refer to all the time who “talk” to me in the Blog…they are the “Crazy CVJ’ers”…hee hee…  

I have a rather simple answer for them.

Our FXstreet Live Sessions Moderator/Manager and my dear friend, Maud Gilson, is from Belgium.

We have learned a great deal about each other’s countries in the Webinar Rooms and FXstreet Premium sessions in the past few years, and lately we were talking of the massive debate on who has the Finest Chocolate in the World.

Of course, Maud says Belgium hands down, and refers to specific practices and Confectioner’s Shops that make the Belgians superior at the practice.

Maud buys her Chocolate with Euros.

I choose Swiss Chocolate…and since I have never been to Switzerland, I can be objective, and say my view is full of ”Neutrality”…just like Switzerland.

If I visit Switzerland one day, I will be buying my chocolate in Swiss Francs.

( OK, “CC’s” in the audience…jump in now and tell everyone where I am going with this! )

My back story here is focusing on how Maud and I are both buying chocolate, so our “Correlation” is very high.

The Correlation is not EXACT, as we are buying different KINDS of chocolate.

Maud=Euro and Tim=Swissy…

Highly correlated…but different!

My “built-in” Lesson today is very similar to our Commodities/Currencies correlations from last week…but even more direct.

The Euro is by far the most popular currency pair for Retail traders to work with…especially newer traders.

It encompasses the most volume, and garnishes the most “weight” of Price activity.

In my experience with the learning curve of most new traders, the”inverse” correlation of Euro/Swissy is by far the first example they will learn.

This also becomes the most overused and misunderstood correlation as well…more on this tomorrow.

Let’s look at Monday’s Price action with both Units on a couple of different time frames.

Let’s see how  Price action looks in context to each other….

(click once for captures)

The “catalyst” here arrives following Price action continuations extending from Friday, bolstered by the Citi Corp news, and Obama’s little Press Conference.

(My Caveat again…like I said Friday…these are irrelevant to me, as Technicals told the story.)

You will immediately notice the Inverse correlations between the Euro and the Swissy, but again…the correlation is not 100%.

It seems many take this for granted and always assume that if the Euro is rising, the Swissy is falling.

Let’s keep a mindful eye on Price as we move from the Asian Session into London and beyond.

Tomorrow, we will consider what specifically makes the Euro and the Swissy inversely correlate…by looking “inside” the Currency Pairs and their Economies.

It may not have anything to do with the “Battle of the Chocolatiers” in the trenches of Europe…but it is interesting!

It may even be more interesting than the “Chocolate Battle”… just don’t tell Maud!