5 Most Predictable Currency Pairs – Q4 2012



Some currency pairs will make a convincing follow through when they break significant support or resistance, and will not look back. When these lines are strong enough, these currency pairs will tend to slow down and eventually bounce back at these lines. These are the more predictable currency pairs – they follow technical rules in a better manner. Unfortunately, not all currency pairs are well behaved and it’s important to separate the wheat from the chaff.

Updates:

The good or bad behavior tends to change over time: some become more predictable and others lose their charm. Market volatility also has an impact. Here is an updated ranked list of the most predictable currency pairs for Q3 2012, each with its characteristics.

  1. AUD/USD: This pair remains at the top of the list. It treats support and resistance lines with much respect, and also plays nicely with uptrend and downtrend channels. The growing number of issues and the current high levels could turn into a significant downfall. Note that Aussie/dollar behaves in a better manner with higher volatility, making October and November stronger months for predictability, and December weaker.
  2. NZD/USD: Australia’s neighbor also has nice patterns. Lines switch from support to resistance and the other way around. It recently developed a double top and a double bottom which will be interesting to watch. For the fourth quarter, the pair moved up the list.
  3. EUR/GBP: This popular cross can be frustrating at times, due to very limited range trading. However, these ranges work nicely for those with low spreads. More importantly, breakouts lead to a different and distinct range quite often.
  4. GBP/JPY: The “geppy” or “dragon” is undoubtedly an exciting pair. It has sometimes been too exciting and too choppy, but it is improving and made it to the list. Breakouts out of range are usually quite impressive. Both the pound and the yen do not behave well against the dollar, and leave the action to the cross.
  5. EUR/USD: The world’s No. 1 currency pair has been trading in more choppy waters recently, pushing it lower in the list. Nevertheless, the pair still tends to mark a peak or a trough and then retests it over and over again, creating double / triple bottoms or tops. The huge liquidity stabilizes the moves which are triggered by the nonstop debt crisis news. The pair would easily lose touch with any technical lines on a major European event, such as a Greek exit, but would definitely move big time. See how to trade the Greek euro-exit).

Do you trade any of these pairs? Are they predictable or unpredictable in your opinion? 

Here are a few more quick notes:

  • USD/JPY returned to its bad behavior after a few good months and isn’t expected to improve anytime soon.
  • USD/CHF has gained some freedom after EUR/CHF began trading above the 1.20 peg, but the franc may soon return to trading in tandem with the euro.
  • USD/CAD had a few good moments in Q3 by respecting strong support, but other than, its behavior leaves much to be desired.
  • GBP/USD tends to trade in ranges, but it isn’t at its best. It fell off the list.

For reference, here is the previous list for Q3 2012.




About

Yohay Elam – Founder, Writer and Editor

I have been into forex trading for over 5 years, and I share the experience that I have and the knowledge that I’ve accumulated. After taking a short course about forex. Like many forex traders, I’ve earned the significant share of my knowledge the hard way. Macroeconomics, the impact of news on the ever-moving currency markets and trading psychology have always fascinated me.

Before founding Forex Crunch, I’ve worked as a programmer in various hi-tech companies. I have a B. Sc. in Computer Science from Ben Gurion University. Given this background, forex software has a relatively bigger share in the posts.

3 Comments

  1. Jordan says:

    I also find the AUD/USD to be one of the best currency pairs to trade. On this particular pair I think the Central Banks will prove once again to be a great contrarian indicator as they are diversifying their holding into Australian dollars at what looks like could be a top.

    Among the number of growing you issues you mentioned that could adversely effect the AUD/USD is the hard landing in China which seems to be snowballing and the coming rate cut by the RBA.

    • Yohay Elam says:

      Thanks for your comment and your interesting insights Jordan. Regarding the RBA, it seems there are more cuts on the way…

      • take pro says:

        I think the best position now is the AUD / JPY and I already bought the price of 79.50
        Australian going to break up CONTINUATION TRIANGEL, and the dollar JPY formed a double bottom – so I think that will give the maximum profit + interest.

Read previous post:
daily outlook monday
Forex Daily Outlook October 1 2012

We begin the week with US ISM Manufacturing PMI and Bernanke's speech  as the main highlights...

Close