The currency pairs differ a lot in the trade volumes, movement range and predictability. Predictable currency pairs pay respect to the clear line of support and the resistance, either slowing down and retreating when reaching them, or they make clear breaks and leave only dust behind them. At other end of the spectrum we have unpredictable and frustrating pairs.
Predictability isn’t static and with evolving market conditions and the changes in the seasons, predictability keeps changing. Here’s an updated, ranked list for 5 currency pairs that are most predictable for the 4th Quarter of 2015.
It is a currency pair which is often overlooked but it moves to top of the list. It trades nicely when trending in specific direction but this pair also enjoys nice long range. New Zealand Dollar breaks the ground to the new levels, marks far spot, then it trades nicely in that range. The previous support provides resistance and other way around. Additionally it has a very good “memory” for the old lines. In 4th quarter its likely that it will continue to enjoy the positive behavior, especially when liquidity is very high.
Australian Dollar is favorite since long time and it has been on top of the list in past. Australian Dollar recently has enjoyed different double bottoms and also tendency of “hugging” round levels, like 0.70 and 0.75. With an even higher volume of trade than in summer in northern hemisphere, the AUD/USD has great predictability potential, especially when it marks the lower highs or the higher lows.
Many have been surprised by rise of EUR/GBP cross, but predictability is very good. It’s a good pair for someone who isn’t hungry for too many pips. This pair maintains the strength when it comes to predictability. Quite similar to the New Zealander, this pair manages marking next level before it settles in the range. Direction can change in the 4th Quarter. But the predictability can remain solid.
In contrast to the previous pair, this pair is wild on pips, however it certainly likes the round levels. We can see some nice breakout of the ranges, with diverging monetary policies rocking the cross.
Often it seems that there’s too much information about this currency pair that is also the most popular in the world. This pair has lost the top position. The 4th Quarter could see more volatile and limited predictability because of uncertainty about the two central banks. This is on our list of assumptions that the things will soon become clearer. More directional trading can see this pair testing resistance and support levels outside limited ranges.
What do you think about our list? Are you presently trading any of these pairs? Share your thoughts in comments below.
USD/CAD: This pair is reaching new levels but it does not seem to respect the previous levels.
GBP/USD: Although Cable is moving a lot, but it is likely to stay erratic, especially as BOE is dependent on Fed.
USD/JPY: This pair also likes to “hug” the round levels, recently 120, but the predictability of this pair is a lot less than AUS/USD pair.
CHF: The ongoing interventions by the SNB has made any cross with Swiss Franc very unpredictable.