Not all currency pairs were born equal regarding technical analysis. Some tend to slow down and halt when getting close to a distinctive line of support or resistance. And if the distinctive line is breached with strong momentum, the break is clear and convincing, with the pair leaving dust behind it and never looking back.
But others can be a real pain, not following any rules. Here is ranking of the most predictable currency pairs, with quick explanations:
- EUR/GBP – This pair’s behavior has been impressing lately. After breaking out, EUR/GBP tends to quickly mark the extent of the move, and to range-trade in the new zone. This was clearly in the current higher trading range, and also in previous ranges.
- USD/CHF – As the Swiss National Bank abandoned its useless interventions, the pair’s moves are more rational, and mostly related to global headlines, such as Mid East tensions or natural disasters. Ranges and breakouts are very clear.
- AUD/USD – The Aussie’s strength is usually the key to being more predictable. It had better days in the past, but it sure respects recent and also very ancient lines, allowing traders to focus on the big picture.
- GBP/USD – Cable is often considered as a roller coaster pair. Wider stops are indeed necessary, but these wider ranges tend to work out not bad at all.
- EUR/USD – The most popular currency pair was quite annoying last year, but has now improved and ends the list. While patience is needed before a breakout can be confirmed, this patience pays off.
Do you find these pairs predictable? Or do you prefer others?
Being a more predictable or less predictable changes over time, due to many factors. This list is based on recent examinations.
An opposite list of unpredictable currency pairs will be published later on. Unpredictable pairs are harder to analyze, frequently make false breaks. With the recent intervention around the Japanese yen, USD/JPY are the immediate suspects for this list, but they are not alone.
Further reading: the previous list form September 2010.