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When two pairs have the same pattern negatively correlated forex?

In the world of forex trading, one of the most important things to understand is the correlation between different currency pairs. Correlation is the measure of how two currency pairs move in relation to each other. A positive correlation means that the two pairs tend to move in the same direction, while a negative correlation means that they tend to move in opposite directions. In this article, we will be focusing on the concept of negative correlation, specifically when two pairs have the same pattern of negative correlation.

Firstly, let’s define what we mean by a pattern of negative correlation. When we say that two currency pairs have a negative correlation, we are saying that when one pair goes up, the other tends to go down. This can be seen in the chart below:

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![Negative Correlation Example](https://i.imgur.com/4H2QcJh.png)

In this example, we are comparing the EUR/USD and USD/CHF pairs. As you can see, when the EUR/USD pair goes up, the USD/CHF pair tends to go down. This is a negative correlation.

Now, when we talk about two pairs having the same pattern of negative correlation, we mean that their movements are not only negatively correlated, but they also tend to move in the same way. This can also be seen in the chart below:

![Same Pattern Negative Correlation Example](https://i.imgur.com/5d6l1Uc.png)

In this example, we are comparing the EUR/USD and GBP/USD pairs. As you can see, both pairs tend to move in the same direction, but the GBP/USD pair tends to move more sharply. However, when the EUR/USD pair goes up, the GBP/USD pair tends to go down, and vice versa. This is a pattern of negative correlation.

So why is it important to understand when two pairs have the same pattern of negative correlation? The answer lies in risk management. When trading forex, it is important to diversify your portfolio and manage your risk. By understanding the correlation between different currency pairs, you can avoid taking on too much risk by trading pairs that are highly correlated.

For example, let’s say you are trading the EUR/USD pair and you notice that it has a negative correlation with the USD/CHF pair. If you decide to also trade the USD/CHF pair, you are essentially doubling your risk, as both pairs tend to move in the same direction. However, if you notice that the GBP/USD pair also has a negative correlation with the EUR/USD pair, but moves in the opposite direction, you can use this to your advantage. By trading both pairs, you can diversify your portfolio and reduce your risk.

In addition to risk management, understanding the correlation between different currency pairs can also help you identify trading opportunities. For example, if you notice that the EUR/USD and GBP/USD pairs have the same pattern of negative correlation, you can use this to your advantage by looking for opportunities to enter trades in both pairs simultaneously. This can help you hedge your positions and potentially increase your profits.

In conclusion, understanding when two pairs have the same pattern of negative correlation is an important concept in forex trading. By knowing the correlation between different currency pairs, you can diversify your portfolio, manage your risk, and identify trading opportunities. If you are new to forex trading or are looking to improve your skills, it is recommended that you study the concept of correlation and practice identifying patterns of negative correlation in different currency pairs.

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