5 Most Predictable Currency Pairs – Q1 2012

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Not all forex pairs were born equal. Some will slow down and then bounce back when they approach a distinct line of resistance or support. If momentum is strong, they will break these lines in a convincing manner without looking back. These pairs, that have a better tendency to follow technical rules, are the more predictable ones. Not all currency pairs are the same. 

The nature of currency pairs tends to shift over time. Some move up the list, while others lose their charm and move down and sometimes out of the list. This is due to many factors, that change. Here is a ranked list of the top 5, with characteristics of every one of them for Q1 2012. Let’s start.

  1. NZD/USD: The kiwi has always been a relatively predictable pair, and now it earned the first place due to distinctly separate trading ranges. When the pair makes a move to a different range, support turns to resistance and vice versa. In addition, old lines are still respected after long periods of time. With action in commodities probably shifting towards oil in Q1, the level of surprise will likely be smaller and moves could remain in a high level of predictability.
  2. EUR/USD: The world’s most popular returned to the list, big time. The excessive amount of noise related to the debt crisis turned into “white noise” and technical levels are working in a far better manner. Resistance lines work well, and support lines work in an even better manner: they are first marked and a break below them has proved powerful. With the most extreme scenarios for the euro-zone already discussed in the open, any breaking news event can trigger clearer breakouts than the ones seen earlier.
  3. AUD/USD: Volatility in this pair significantly rose, yet the pair still boasted an excellent behavior in both horizontal support and resistance lines as well as channels which stood out in Q4 2011. As the main channels are narrowing, the behavior in Q1 2012 will likely be of lower grade, hence the loss of the first place. Still, this pair remains one of the most predictable ones.
  4. CAD/JPY: While USD/CAD and especially USD/JPY are choppy and problematic pairs, this cross isn’t that bad, with slowdowns towards horizontal resistance lines and clear uptrend support.
  5. GBP/USD: The pound usually follows the euro, just with higher volatility, requiring wider stops. It certainly maintains high volatility and trades in relatively distinct ranges, yet it lost some of its charm and its fate in Q1 2012 is unclear: will it follow the euro or distance itself even more.

A major pair missing from the list is USD/CHF. It is still looking for a direction: after the massive SNB intervention it lost its safe haven status, but might regain this status once again.

This intervention isn’t over yet. The SNB might raise the floor under EUR/CHF. Even if it doesn’t happen, the speculation around it makes trading EUR/CHF and USD/CHF quite challenging. Charts are choppy.

USD/JPY will likely resume some movements soon, but it remains a very frustrating pair.

For reference, here is the previous list for Q4 2011.

What do you think? Which pairs do you find to be the more predictable ones?

Get the 5 most predictable currency pairs

About Author

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.