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Currency pairs are not born equal and do not follow the same technical behavior. The better ones will enjoy a nice follow through after breaking a clear line of support or resistance. And in case they lack the strength, they will slow  slow down before such a line and eventually bounce nicely back to range. Yet other currency pairs can trade choppily around seemingly important lines and leave the technical trader frustrated.  

Update: 5 Most Predictable Currency Pairs – Q1 2015

Update:  5 Most Predictable Currency Pairs- Q4 2014

This  predictability changes over time due to various factors. The low levels of volatility in some currency pairs are having their impact, as well as divergence in monetary policy.  Here is an updated and ranked list of the 5 most predictable pairs for the third quarter  of 2014, each with its special style

  1. EUR/GBP: This cross  storms back to the  top of the list  thanks to divergence between the central banks and to clear behavior: it tends to break down in a clear manner, then mark the bottom of the range, bounce back to mark the top and then trade within the range for some time until the next move. We have seen it several times and this style is likely to continue in the third quarter and perhaps also afterwards. And while the style is likely to continue, the direction of the move  will not necessarily remain solely downwards.
  2. NZD/USD: The kiwi moves up the  list as the recent float around the highs is expected to give way to more directional trading in Q3 and this could result in clearer channel trading, something where the kiwi wasn’t at its best in Q2.    In addition, the pair respects the previous highs / lows in a remarkable manner.
  3. USD/CAD: Overlooked by many traders due to a relatively small amount of pips seen moving here, the pair is certainly worthy thanks to its way of honoring previous levels. Relatively short periods of directional moves are usually followed by very narrow range trading. The improvement of the US economy is helpful to Canada, and the pair reacts.
  4. GBP/USD: Cable,  called by some “the devil’s currency”, usually requires wider stops than other currencies. It is still wilder than the previous pairs on the list and the pound is better paired with the euro. Nevertheless, its breakouts allow for nice moves. Recently these moves have been to the upside, and we may see moves in both directions during Q3, but we can expect them to be relatively strong.
  5. AUD/USD: The Aussie usually appears in the list. This time, it lost  the first place, as it tends to slow down in the summer months  in the northern hemisphere. Nevertheless, the pair is likely to continue enjoying textbook higher lows or higher highs to determine its direction. Channels are not so clear as beforehand  though and this explains the downfall.

What do you think about this list? Do you agree? Disagree? What are your favorite pairs?

Some notes:

  • The world’s most popular pair, EUR/USD, is clearly absent from the list: the abundance of news related to the pair has turned it into a very crowded trade and no change is likely in Q3. Q4 will probably be a different story.
  • Also USD/JPY is absent: it refuses to pick a direction and just plays around 102. And also here, we can expect a change in Q4.
  • Some crosses such as EUR/CAD and GBP/JPY almost made it to the list and are also worth looking it.

For reference,  here is the list for Q2 2014.

Further reading:  50 Top Forex Twitter Accounts

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