Chart patterns, such as head and shoulders, double tops, and ascending triangles, are fundamental to technical analysis. These patterns help traders predict future price movements based on past behavior. Predictable currency pairs often form recognizable patterns, providing traders with actionable insights. The Exotic currency pairs have poor liquidity and volatility and are from emerging economic nations like Brazil. Due to the lack of liquidity, we won’t be featuring the exotics in the top 10 Forex currency pairs to trade. These comprise some of the best forex currency pairs to trade, generally with high liquidity.
- Liquidity is good, and the pair is easy to read for technical analysis.
- Any of the 10 top Forex currency pairs are suitable for beginners if trending and show explicit price action.
- The first currency is called the base currency, and the second is the quote currency (or counter currency).
- Although there is no such thing as a sure thing in the forex market, some currency pairs are more predictable than others, especially when using specific analytical methods.
- In every currency pair, there is a base currency and a quote currency.
NZD/USD – (New Zealand Dollar/US Dollar)
The first currency is called the base currency, and the second is the quote currency (or counter currency). The base currency represents the sell or bid price and the quote currency represents the buy or ask price. The difference between the bid and ask price is known as the spread.
When either of the above scenarios occurs, move down to the 1-hour or 4-hour chart for a precision entry. Since mid-July, the price has stuck on a strong historical area of support at $0.7320. The price of AUD/USD went sideways in a range from mid-May to mid-June 2021 when it broke below and made a lower low and lower high. 68% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you can afford to take the high risk of losing your money. Trading Forex is challenging, but there are ways to make Forex trading easier.
Professional Forex traders know not to trade if they lack focus or have just had a row with their partner. Trading or investing in financial instruments such as cryptos may not be suitable for all investors. There are no guarantees for profiting from cryptocurrencies, and it’s advisable only to risk what you can comfortably afford to lose. The price is trying to stay above, which would cause an EMA crossover. On the daily chart, such a crossover can indicate a change of direction.
Major Currency Pairs
A Forex pair (or currency pair) is a price quote of the exchange rate that shows how much one fiat currency is worth compared to another fiat currency. Technically, USD/CAD has a good memory for old support and resistance lines, even when oil prices jump out of range. The kiwi breaks ground to new levels, marks the far spot, and then trades nicely within that range. In addition, it has an excellent “memory” for old lines, and now it needs them. In the fourth quarter, it is likely to continue enjoying this positive behavior, at least while liquidity is high, before Christmas.
GBP/USD is just too choppy and is prone to the odd Brexit headline. The USD/CAD tends to be negatively correlated with the AUD/USD, GBP/USD, and EUR/USD pairs due to the U.S. dollar being the quote currency in these other pairs. In 2022, the war in Ukraine, along with the resulting energy crisis and political instability, weighed on the price of the euro.
Most Predictable Currency Pairs
The relationship between the interest rates set by the respective central banks can affect the currency pair price, as well. The next most actively traded pair was the USD/JPY, with a market share of 13.5%, slightly higher than its prior 13.2%. This pair has historically questrade fx been sensitive to political sentiment between the United States and the Far East. It is easier to read these five Forex currencies because they’re either ranging or trending.
AUD/USD: Trading the “Aussie”
In Q4, high uncertainty about both bitstamp review central banks could cause more volatility but only limited predictability. The value of Australia’s currency is closely tied to the role and value of its exports in its economy. Therefore, a downward movement in that value could affect the AUD/USD currency pair value, strengthening the dollar to the loonie.
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It tends to have a negative correlation with the USD/CAD, USD/CHF, and USD/JPY pairs due to the U.S. dollar being the base currency in these cases. The base currency is the first currency listed in a currency pair and represents the currency being bought or sold. Some examples of base currencies include USD (U.S. dollar), EUR (Euro), GBP (British pound), JPY (Japanese yen), and AUD (Australian dollar). Advanced traders tend to develop trading strategies for specific trading pairs and optimize according to their characteristics.
These pairs follow consistent patterns, making them easier to analyze and forecast. By identifying predictable currency pairs, traders can develop more effective forex trading strategies, minimizing risks and maximizing potential profits. The top five predictable currency pairs include AUD/USD, USD/JPY, USD/CAD, NZD/USD, and EUR/USD.
The most traded currency pair is the EUR/USD, owing to the global prominence of the economies of the European single market and the United States. It made up 22.7% of overall market share, as of the latest BIS survey. The high daily volume and liquidity of this pair ensure tight spreads for traders.
It is essential to be aware of the technical and fundamental predictability of currency pairs – and watch their evolution as well. Forex trading is never a one-way street, and knowing when to drop a currency pair that has lost its predictability is critical. When understanding the most predictable currency pairs, we also look at the EUR/GBP pair. For this, we have to look at Brexit as one of the biggest contributing factors. Any new updates for this agenda may mean that this pair could see some fluctuations like never before.