5 Most Predictable Currency Pairs – Q4 2011

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For more on the Australian dollar, read the AUD/USD forecast

Some currency pairs will push through if they break a significant support or resistance. If not, they will bounce back or at least slow down before approaching these lines. Those well behaved pairs are more predictable. Even if you lean heavily on fundamentals, these lines will help. In some currencies. Some other ones are just a nightmare.

The recent high volatility in the markets enabled us to get a better picture of the real nature of these pairs – how they behave under pressure / more extreme conditions.Here is an updated and ranked list of the 5 most predictable pairs for Q4.  The characteristics of each of these pairs is lightly different. Let’s start:

  1. AUD/USD: The Australian dollar has suffered significant losses, but the behavior has improved and earned it the first place. The pair enjoys ranges which are highly respected, like in the days when it was on the rise, and very nice channel behavior. When an uptrend or downtrend channel is broken, no matter in which direction, the moves are significant and the pair “remembers” old lines. These characteristics come despite sharp moves.
  2. GBP/USD: The pound also has high volatility, and also enjoys clear channel behavior. Moves are wider and require wider stops, as always, but they are not as wide as beforehand, hence the second place. Q4 will likely see further sharp moves, but after the long term range was broken, predictability is likely to remain relatively high.
  3.  EUR/CAD: This cross is often overlooked, but has an interesting pattern – in the long term, it trades in a range, but this isn’t choppy and nervous but rather quite cyclical, similar to a wave. When it stalls, it maintains plausible range trading. Note that both the euro and the Canadian dollar are far less predictable against the greenback, but they find an interesting balance against each other.
  4. NZD/USD: The kiwi had healthy rises, then some range trading, in which ranges are moving lower. All in all, big breaks mean trading in separate ranges. These are not as clear as in its neighbor, but they’re not bad.
  5. USD/CHF: Last but not least, the Swiss franc is still relevant for this list. The huge intervention by the SNB sure knocked out a lot of trades (although there were warning signs) and also knocked it down from the first place. Nevertheless, it still has relatively clear ranges, with support lines better respected than resistance lines. If the SNB will be satisfied after this move, the pair can move higher on the list.

EUR/USD is still very problematic: the flood of news concerning the debt crisis has risen. This noise makes the pair very choppy and somewhat unpredictable.

This situation may be resolved soon in two ways: either the noise will become too much, with a smaller effect on the price, or either we’ll see a resolution, with a possible Greek default in the middle of the quarter.

Until then, it is a great pair if you trade the news on a short term, but relying only on technical analysis here is still an issue.

Another major pair, USD/JPY has just become more choppy and more frustrating.

For reference, here is the previous list for Q3.

What do you think? What are your most predictable pairs?

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.

24 Comments

  1. Mike Davidson on

    Good article thanks, reminder not to focus just on the usual suspect (EURUSD). Interesting that there are no JPY pairs – in the yen just too unpredictable at present?

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  3. Thanks Mike. Indeed, the most popular pair doesn’t play well with technicals now. USD/JPY is quite annoying, hardly moving and very choppy. Perhaps crosses such as GBP/JPY are better…

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  13. Mary McArthur on

    Forex trading education is so important. Thanks for your informative article on predictable currency pairs. Much appreciated

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  22. nihal bhat on

    dollar yen hardly moves at all. it is capped by potential intervention just like CHF but not to same extent. chf is seriously weaker and weaker, its totally dead due to the SNB, and is always a long on dips(usdchf).

    a couple of choppy but highly volatile crosses – eurnzd, gbpnzd, gbpaud, euraud, eurcad, and maybe add some commodities like crude oil which is pretty volatile. avoid gold because its hard to pick that one.

  23. Alex du Plooy on

    Articles like yours on Forex trading really help. Currency pairs are so important.

  24. Siswodipuro on

    How about GBP/JPY can you explain about that…. fortunately i have forexsuccesssystem who exactly tell me what to do….