5 Most Predictable Currency Pairs – 03 2017
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5 Most Predictable Currency Pairs – 03 2017

Not all currency pairs are born equal. Some move more than others and some of these movements are more predictable. What makes a pair more predictable for technical traders? Such a pair either makes a breakout with momentum, not looking back, or bounces off a line of resistance or support. A forex pair that respects a trendline is easier to trade than one that chops around. The less predictable pairs are choppy, wild and patterns are hard to find there.

And with the price action, also the behavior of these currency pairs changes from time to time. Volatility, seasonality and other factors impact the behavior. As the third quarter of 2017 commences, it is time for an updated and ranked list. Here goes:

  1. EUR/USD: The world’s most popular currency pair tops the list, something that doesn’t usually happen due to its many moving parts. A higher degree of certainty in Europe eliminates some of the unpredictable factors. The pair has an excellent memory for old lines of support and resistance, sometimes going back years into the past. The wider ranges are respected very nicely. While an initial break out of range may be followed by an instant retreat back to the range, it is easier to identify if the break is real or not. Through Q3, we expect the current uptrend to continue, with pauses for consolidation.
  2. AUD/USD: The Aussie has topped the list more than once and also in Q3 2017 it could continue enjoying the known characteristics: trading either in an uptrend or a downtrend, respecting the diagonal trendlines. While the movements are not as strong as they were in the past, trendlines and also to a lesser extent, lines of support and resistance, get their respect.
  3. GBP/JPY: Both components of this wild pair, also known as “the dragon” are quite unpredictable on their own. Geopolitics impact Japan and high uncertainty around Brexit have caused a deterioration in how these currency  pairs react towards lines of support and resistance. However, when the US dollar is taken out of the equation and when we are aware of the large amount of pips that move in this pair, the behavior is not too bad at all. When the pair chooses a direction, it sticks with it for quite a long time. Double tops and double bottom are not uncommon. Trading with lower leverage is essential, but there are quite a few opportunities.
  4. USD/CAD: The loonie offers higher volatility than in the past, and this is helping its technical behavior. The stronger movements are likely to persist with speculation about a rate hike in Canada and higher oil prices. Dollar/CAD has relatively clean breakouts, leaving dust behind it after making a move. As long as this high volatility lasts, we can expect a better behavior. The pair doesn’t behave that well when volatility is low.
  5. NZD/USD: While the kiwi enjoyed a good Q2, the winter in the northern hemisphere could see a more sleepy period. Similar to the loonie, this could limit its predictability. Nevertheless, it is still quite a good currency pair that provides opportunities and is worthy of appearing on the list.

What do you think about the list? Does it coincide with your hunches?

Here are important pairs that didn’t make it to the list:

  • GBP/USD: The mix of Brexit and Trump worked at first, but has now become too messy. The pound, in particular, has too many moving parts.
  • USD/JPY: With the occasional flare up around North Korea and Qatar, geopolitics makes the yen a bit more tricky. It is still the best currency pair to trade around US indicators, but its technical predictability is likely to further deteriorate.
  • USD/CHF: The Swiss National Bank continues intervening to weaken the Swiss franc, making trading in any CHF pair quite problematic.

Here are the previous lists, from Q2 2017 and Q1 2017.

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Yohay Elam

Yohay Elam

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 a 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.