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8 Most Predictable Forex Trading Pairs

Discussion in 'Forex Discussions' started by painofhell, Jul 9, 2015.

  1. painofhell

    painofhell Content Contributor

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    The nature of the free market, and the sheer number of factors that can affect the value of a nation’s currency, means that forex trading pairs will never be wholly predictable – but that hasn’t stopped the world’s leading traders, analysts and finance experts trying their hardest to get a handle on things.

    While predictability may not be assured, forex pair patterns can and do emerge. Because of the vast amounts of volume traded, extensive market analysis, and the extent of their coverage in the media, the major FX pairs are often easier to analyse, if not to predict, than others.

    As market conditions change, and their values rise and fall, major FX pairs are often range bound – that is, they move up and down in value between two value points, and never quite seem to break free from these constraints. This kind of loose predictability can be incredibly valuable to traders, and makes the major FX pairs ideal starting pairs for those looking to get into FX trading for the first time.

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    However, not all currency pairs enjoy this kind of loosely predictable ebb and flow over the medium term. A whole variety of market conditions, be it more bad news from Europe, political uncertainty, interest rate changes, or simply a change in the overall appetite for risk within the markets, can affect the value of currency pairs.

    EUR/GBP

    With the UK economy closely tied to Europe, and the unpredictable moves in GBP/USD in Q1, this pair provides a far smoother ride at the moment, especially with the limited trading ranges. Furthermore, this cross has shown excellent separation between ranges as well as consistent channel trading. While, the range of pips in this cross might not be substantial, those ongoing Eurozone troubles, notably of Italy and Cyprus, can be predicted to cause further volatility for this cross in coming months – with currency values reflecting either a flight to safety from Eurozone issues, or a calm when things improve.

    AUD/USD

    Look at the bigger picture with regard to this pair and you’ll see wide range trading at play. Take a closer look, and you’ll notice that the AUD/USD pair generally respects both falling and rising channels. It generally takes something quite extreme to mess up this pairing, making it one of the most traditionally predictable out there. Check out that actual turn in direction that occurred in March and you’ll see that it not only accompanied by a false break, but with a noticeable hammer pattern too. This behavior is pretty much expected to repeat on the topside in of the wide range in Q2.

    GBP/USD

    It may be a major FX pair, but it can be violently erratic at times – and Q1 2013 has been no exception. However, the pair’s recent drop below the weekly support lines has definitely helped it with regard to improving its respect for ranges. With Mark Carney taking over as governor of the Bank of England, this pair’s recently improved behaviour is predicted to continue further into the end of the quarter until we see how Carney delivers.

    USD/JPY

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    While this pair is a popular one to trade, it certainly isn’t the easiest, so its showing up on this list may be a surprise to some. Traditionally exhibiting a volatile relationship, remember what I said earlier about volatility being predictable! It may have shown some turbulent behaviour in Q1 2013, thanks to the changes taking place within the Bank of Japan, but that uncertainty is beginning to smooth itself out now that the BOJ has settled on new leadership. The new leadership lineup began making decisions in April, and it remains to be seen whether they can resume the yen’s downfall or if traders will be left disappointed with the yen pushed higher.

    NZD/USD

    This is an interesting one. While it showed some choppiness in Q1 2013, this pair tends to mark the range upon a breakout, and stay within this range for a period of time. You’ll also notice that it tends to find it hard to adjust to the high levels. Into Q2, the NZD has continued to respect ranges quite well. While its behaviour might not have been ideal recently, this still remains a relatively good pair because it still tends to mark the top, or bottom, of the range when a breakout occurs, and will usually stick to it for some time.

    USD/CHF

    The Swiss National Bank maintains a floor of 1.20 under the EUR/CHF, so any moves in EUR/USD therefore have direct consequences for the USD/CHF. With the recent turbulence to EUR/USD, you’d think this would make USD/CHF an equally tough pair to deal with, but not so. In fact, this pair behaves in a more predictable manner than most. In the event of a breakout, a new trading range tends to be found and stuck to. Ranges are determined pretty neatly with this pair, and its behaviour looks set to continue in the same vein so long as the Eurozone crisis continues in the same vein too – that is, remaining managed but unresolved.

    EUR/AUD

    While both of these currencies used to trade in tandem, nowadays each has its own direction. An interesting pair to watch, they work well together, with long term limits and channels generally well respected, especially on the upside.

    GBP/JPY

    The ‘Dragon’ may be traditionally predictable, but it certainly retains the power to get that pulse racing. Even if the trend is of it settling down into a safety zone, in this range breakouts can be quite effective, regardless of whether either currency is on good terms with the dollar.

    A noticeable absence:

    EUR/USD

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    This major FX pair is incredibly volatile right now – and not in a predictable manner! Put simply, there’s just too much going on on both sides of the pond to determine any kind of solid outcomes here. With the Eurozone crisis ongoing, there’s sure to be plenty more action ahead, with the pair likely to suffer false breaks.
     
    #1 painofhell, Jul 9, 2015
    Last edited: Mar 15, 2016
    prav likes this.
  2. Sharon Higgins

    Sharon Higgins New Member

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    I honestly don’t think there is any pair that really is predictable, I always consider every pair to be unpredictable and that’s one of the reasons why Forex is such a difficult business, the only way we can gain profits consistently, it’s to make sure we got proper plans in place, if we aren’t planning well than everything will be a struggle. I am fairly lucky that I trade with OctaFX broker since they help me out with planning better given their demo contest promotions, it’s really extra-ordinary especially the Southampton Supreme demo contest, it’s just 90 minutes short contest yet got unbelievable prize, it gives really boost to motivation and we can trade or say practice nicely without much difficulty.
     
  3. 4xbug

    4xbug New Member

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    I personally trade EURUSD as it is one of the most popular currency pair and my favorite too although a risky one but helps a lot for earning. There are few brokers who offers some exotic pairs too for trading but I suggest staying away from such pairs as they might be very risky.
     
  4. orni308

    orni308 New Member

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    Some of the pairs mentioned are very volatile and moreover its very difficult to make predictions, although with volatile pairs you can make quick money, but its very risky.
     
  5. Sharon Higgins

    Sharon Higgins New Member

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    That’s true Orni308, it’s obvious that when we talk about volatile pairs then risk is present but then life is risky itself, and so I won’t mind taking calculated risk. The issue occurs when people think risk is a blind dart and the difficult part is that’s not reality, so people obviously suffer due to that. Risk in life or business is absolutely must and should be taken, but there is a really fine line between calculated risk and blind darts, if we’re able to understand that then we will win more often than not, I am having great safety with OctaFX broker which is through their rebate program that gets me 50% back on all trading orders and this is even with losing trades too, so that’s why it’s all so good and useful for anyone!
     
  6. 4xbug

    4xbug New Member

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    I guess traders who make calculations for manage their risks are quite more successful in forex trading but to acquire success you might focus on building a right approach to manage your capital accordingly.
     
  7. Sharon Higgins

    Sharon Higgins New Member

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    I do have to agree with you 4xbug, I too have similar believe that if we’re really looking towards achieving good profits then managing is the key here, we need to make sure we manage the risk very well and that’s how we’re going to find results in our favor far easier. I always back myself in tough situations even if the pair goes in unpredictable mode, it’s simply to do with OctaFX broker and their wonderful set of features which is especially to do with their giant bonus up to 50%, it’s not just huge that way but it’s also use able and that makes things so nice and working for all especially beginners and it has done wonders for me too.
     
  8. jologs

    jologs New Member

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    personally i dont trade 8 pairs, but my favorit pairs at hotforex are xauusd eurusd and the eurjpy usdjpy :D
     
  9. Sharon Higgins

    Sharon Higgins New Member

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    I don’t think it’s anything wrong to trade on more than 1 pair, but the issue is that we should go in systematic way instead of just imagining things and follow it blindly; it will always lead to losses for all. I always prefer to go with pairs like EU, GU, EJ, UJ and such, but I still continue to monitor other pairs like AU, XU or such but I only use them when there is clear cut opportunity, so that’s the right way to go about things and will keep us in positive zone. I am lucky that with OctaFX broker there are so many options to select from and also having low spreads do the deal for me nicely with taking off all the pressure.
     
  10. jologs

    jologs New Member

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    yup i have to agree, yeah, most pairs move according to major moves on the eurusd, and its ok to trade more than just one pair but not go trading all pairs available at any broker, like hotforex has about 47 forex pairs and so. just go with the right approach, trade pairs after you study them thoroghly
     
  11. Sharon Higgins

    Sharon Higgins New Member

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    That’s true jologs, we might have many options available but that doesn’t mean we should go with all, we should go with our strength and my strength is majors pair like EUR/USD, EUR/JPY and more on those lines, so that’s why I stick to that, I believe it’s what helps in performance since I understand these pairs movement so much inside out. Btw, you should try OctaFX broker if you like more options, they’re offering over 60-70 instruments on which we can trade, so that adds up to nearly 15-20 more options for you, but obviously like I said, I personally prefer sticking to 5-10 pairs, so I hardly use that many, but maybe you might like it, so check it out.
     
  12. tiptip

    tiptip New Member

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    thanks 4xbug for the caution to take when it comes to exotic pairs, i'm new to trading and would love to know why are they very risky, the exotic pairs?
     
  13. Sharon Higgins

    Sharon Higgins New Member

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    Maybe I could help you on that. It’s basically to do this way that Exotic pairs are less traded, so they’re violate in one direction and that’s why they have higher spread, so it’s great if you get it right, but can be horrible and nothing short of nightmare if you get it wrong, so generally newbies need to work in field that they can survive on and exotic pairs are not that type. If you ask any expert, it will be obvious for him to suggest major pairs which include EUR/USD, GBP/USD and one these lines, so this way you have better control even if you get it wrong. I always go with major pairs and thanks to OctaFX broker with their low spread, I am able to work it fairly nicely.
     
  14. Mistalee

    Mistalee New Member

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    EURUSD is my favorite too, But I have never heard about the other pairs, it would be nice to try that out too thanks.
     
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