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A question about cross currency pairs...

Discussion in 'Education, Tutorials & Courses' started by ForexLive, Jun 16, 2016.

  1. ForexLive

    ForexLive Forum Member

    Sep 2, 2015
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    And it is a good one as he questions his trust.... Chris wrote: Hi Greg, Can I post a question here related to trust - trusting the price action on crosses? As I underatand it the price for a cross (say GBPAUD) is calculated as follows: price GBPUSD / price AUDUSD. Therefore, the price action for GBPAUD does not directly reflect transactions that involve the exchange of GBP for AUD and vice versa, Whereas the price for GBPUSD is more directly relfection of supply and demand, and transactions for that pair. Consequently I find it difficult to trust support and resistance levels for crosses as it seems less likely that if traders start selling GBPAUD at the 60-200ma (for instance) that this will directly impact price action for this cross, given how the price is calculated. I wonder if I have adopted a flawed assumption here about trading crossses, something that is preventing me from trusting support/resistance levels and divergences. Am I missing something or have I got something wrong?

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