5 Most Predictable Currency Pairs – Q1 2013

Not all currency pairs behave in the same manner: the better ones will slow down when approaching a clear line of support or resistance and will then bounce back. With enough momentum, the pair will break the line and never look back. These pairs are the more predictable ones. However, not all of them tend to follow technical rules that closely.

And as seasons change, so do markets: some become more predictable, while others lose touch with charts. Many factors impact this behavior. Here is a ranked and updated list for Q1 2013 of the top 5 pairs, with each pair’s characteristics.

1. AUD/USD: The pair might change its direction in Q1 2013 and drop, but it isn’t likely to change in its predictability: it trades in a clear and wide range. Moves within the range were within clear channels, and when these were broken, the impact was clear to see. Stability in China has lowered the volatility but not the predictability. We could see an uptick in volatility in Q1 2013, something that will certainly help technical trades on the Aussie.
2. EUR/GBP: This popular cross trades very nicely within channels and it has advanced from the third to the second place. The pair tends to check out the limits of the channels before making a big bounce to the other direction. With the UK following Europe in muddling along and with nasty moves in GBP/USD, this pair provides a more smooth ride, especially with the limited trading ranges.
3. USD/CHF: This seems like a surprising choice, as the SNB maintains a floor of 1.20 under EUR/CHF and the moves in EUR/USD therefore determine the moves in USD/CHF. Nevertheless, this pair behaves in a better manner than all the others mentioned here. Ranges are determined quite nicely, and when a breakout occurs a new trading range is found and traded in. This behavior is likely to continue in Q1, assuming the European debt crisis continues in its current form: managed but not resolved.
4. NZD/USD: The kiwi falls from the second place after some choppiness – the pair finds it hard to adjust to the high levels. Nevertheless, it is still a very interesting pair which tends to mark the range upon a breakout, and stay within this range for a period of time.
5. EUR/AUD: Another euro cross closes the list. Long term limits and channels are generally respected, especially on the upside. Both currencies used to trade in tandem, but each has developed its own direction. Together they work quite nicely and will be interesting in Q1.

One  major pair missing from the list is EUR/USD: the world’s most popular pair is almost OK, but not good enough. It has too many false breakouts. The number of risk factors on both sides of the Atlantic is a bit too much.

Another major pair that is missing isUSD/JPY: the pair soared in Q4 but didn’t always respect technical lines, even though it was one of its better quarters. Traditionally, this is a problematic pair.

For reference, here is the list for Q4 2012.

What do you think about this list? Do you agree? Disagree? What are your favorite pairs?

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How About Investing in Forex?

Forex is associated with active trading, very active trading, sticking the nose to the screen. There’s an option to invest in forex trading – not buying a currency and sitting on it, but rather investing your money with successful forex traders that trade for you – the same way as putting your money with mutual funds.

With mutual funds that specialize in stocks, you invest in trusted investment houses. They buy and sell stocks for you, and for others. Good mutual funds outperform the markets. For example, they specialize in S&P or Nasdaq stocks, and have a better yearly yield than these indices.

They enable you to invest in stocks without the hassle of buying and selling stocks by yourself. But not all mutual funds are equal – sometimes they under perform and have a yield lower than the stocks they specialize in.

And sometimes stocks just go down.

In forex trading, there’s always a currency that goes up, rising against another currency. This is one of the main drivers of traders into forex trading. Good traders buy and sell currency pairs in different frequencies, and profit off the changes in prices.

But not everyone is up for active trading.

Forex trading consumes time, and some traders get addicted to it. Sticking the nose to the screen and watching every pip move up or down is too common with traders.

The solution is investing in forex traders who are successful experts. They trade all the time, you automatically follow them and make profits off forex trading without the hassle.

But good forex traders are hard to find.

Yes, some 75% to 95% of retail traders lose money. If you follow the losing ones, you lose money the same way that you lose money with underperforming mutual funds that specialize in stocks.

There are quite a few services offering the trader the option to automatically follow traders. My favorite isCurrensee. Why? Not only because I’m affiliated with them. Their program, which is still rather new, is built up of important components that are very promising:

• The professional traders trade in their own, real, live account. No demo accounts are involved. The leader’s success is your success.
• Currensee is regulated by the British FSA, one of the toughest regulatory bodies out there.
• They cherry picked the trade leaders which you can follow – they are ranked not only on their performance, but also on their risk.
• Trade leaders’ performance is monitored on a daily basis, meaning that profitability is kept high. Profitability is compared with the S&P index.
• The investor has full control over which traders he follows, sees every single action made by the trade leader (including slippage) , and can change the amount of money invested in every leader easily.

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