Forex Trading Using Intermarket Analysis

PREFACE
PreFaCe

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ForeX trading using interMarket anaLysis
THis Book exPlores
the application of intermarket analy-
sis to the foreign exchange market, the world’s largest and most 
widely traded financial market. Intermarket analysis helps traders 
identify and anticipate changes in trend direction and prices due 
to influences of other related markets as financial markets have 
become interconnected and interdependent in today’s global economy.
These markets include forex futures and options as well as major cash 
forex pairs, which are affected not only by other currencies but by 
related markets such the S&P 500 Index, gold, crude oil, and interest 
rates. As the world economy of the twenty-first century continues to 
grow and as new advances in information technologies continue to be 
introduced, financial markets will become even more globalized and 
sophisticated than they are today, increasing the central role that the 
forex markets play in the global economy.
Since its introduction in the 1980s, intermarket analysis has become 
a critical facet of the overall field of technical analysis because it 
empowers individual traders to make more effective trading decisions 
based upon the linkages between related financial markets. By incor-
porating intermarket analysis into trading plans and strategies instead 
of limiting the scope of analysis to each individual market, traders can 
make these relationships and interconnections between markets work 
for instead of against them. 
Forex markets are especially good candidates for intermarket analysis 
because of the key role of the U. S. dollar in most major currency 
pairs while other currencies tend to move in concert against the dollar. 
What influences one currency often influences many other currencies, 
usually not in lockstep but to a greater or lesser degree, depending on 
the circumstance. Knowing what is occurring in various currencies 
and other related markets can provide traders with both a broader 
perspective and greater insight into forex market dynamics. It can 

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Xviii
thereby provide an early warning of impending changes in trend direc-
tion in the target market. This allows traders to make more effective 
and decisive trading decisions than would be possible by relying on 
traditional single-market technical analysis indicators that too often 
lag the market.
This book is addressed primarily to traders and investors who use per-
sonal computers and the Internet to analyze forex markets and make 
their own trading decisions. The book also offers insights into how 
day traders and position traders in both the cash and futures markets 
can improve their trading performance and achieve a serious competi-
tive advantage in today’s globally interdependent financial markets. It 
will interest both experienced traders and newcomers to forex markets 
who are inclined toward technical analysis and recognize the potential 
financial benefits of incorporating intermarket analysis into their trad-
ing strategies.
Louis B. Mendelsohn

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