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Some currency pairs are better than others. What does it mean being better? Many forex traders rely heavily on charts or at least use the basic support, resistance and trend lines. A well behaved and predictable currency will  either slow down and retreat upon tackling such a  line, or push  forcefully  through the  line. leaving dust behind them. The less predictable pairs trade in a more choppy fashion, shattering lines and leaving us quite frustrated due to another “fakeout”.  

And with the  movement in currencies, also the behavior of currency moves: this depends on  seasonality, fundamentals and many other factors.  Here is an updated and ranked list for of the 5 most predictable currency pairs for Q3 2016. The list is offered only for Forex Crunch subscribers

  1. AUD/USD: This pair is a regular favorite and it now returns to  the top of the list. The pair performs best on  higher volatility, Political uncertainty in Australia, a potential repeat of stock market jitters in China and the global risk aversion mood could all contribute to  bigger movements. Such bigger movements mean the Australian dollar is more likely to respect technical lines, having them as clear range separators. In addition,  the pair tends to trade in downtrend or uptrend trading ranges, and this feature could be seen again.
  2. EUR/USD: The world’s most poplar pair has been quite frustrating for many months, trading choppily in narrow ranges. This could change now: Brexit  means the  common currency is more vulnerable and this could trigger higher volatility. In addition, slightly lower liquidity, especially in the summer months, could mean less moving parts that make things choppy. The pair has a good memory for old lines. Standing in the middle of the range, lines are well known both the upside and to the downside, which seems a more likely direction.
  3. NZD/USD: The kiwi advances  from the last spot in the  list after the recent rise. Kiwi/dollar likes trading in ranges, breaking to  a different range and getting used to that new range. It may offer less pips in times of high volatility, but the actual size of the movements in percentage terms is nothing to be frowned at.  Contrary to its peer, the Aussie, trend lines are not its strength.
  4. USD/CAD: Dollar/CAD is a currency pair frowned upon by many, but with some kind of stability in oil  prices and the focus being on the old continent rather than North America, fundamental reactions are much more predictable. Also technical analysis has improved as the lines are well defined. Watch out for some choppiness around the edges, but catching short term trends should be  easier than beforehand, at least in this quarter.
  5. EUR/GBP: The huge Brexit crash  and the  never-ending uncertainty makes cable a difficult pair, but EUR/GBP has  usually been a better candidate. The number of pips is more limited than EUR/USD or GBP/USD but old lines are  respected and  if you like range trading, opportunities can be found here.

What do you think? Do you recognize any of your  favorite currency pairs here?

And here are currency pairs you might feel are missing:

  • GBP/USD: As aforementioned, Cable is somewhat crazy. The shock Brexit decision sent it to levels last seen in 1985. Uncertainty remains high and will remain this way throughout Q3. Cable is usually a faster moving pair in comparison to EUR/USD that can provide opportunities, but the current  environment is way too wild.
  • USD/JPY: The yen is absent from the list for one sole reason: intervention. The BOJ probably intervened around Brexit and could  intervene on lower liquidity during the summer. The pair could return to the list as things calm down.
  • USD/CHF: With the franc, intervention is all out in the open. Safe haven flows are met with SNB selling and it will remain out of sight for the foreseeable future.

Here are the previous lists from Q2 2016 and  Q1 2016

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