Divergence

It’s been a busy morning and there is a lot that I would like to write about, I hope to have time this afternoon/evening to share some deeper thoughts. The relationship between $EURUSD and $ES_F/$SPY has been well noted during the past several weeks – last week I predicted that this relationship would begin to weaken. This morning there is a significant breakdown in the correlation as equities have traded down to new 5-week lows while EUR/USD continues to remain bid above 1.3450:

I learned long ago that correlations & indicators work until they don’t – then they often fall apart in spectacular fashion. What does this divergence mean? I look forward to your insights in the comments section.

The information in this blog post represents my own opinions and does not contain a recommendation for any particular security or investment. I or my affiliates may hold positions or other interests in securities mentioned in the Blog, please see my Disclaimer page for my full disclaimer.

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