Another advantage is that whenever such forex pairs break through their major resistance and support points, the trader can expect to make a few pips through a low stress and high probability breakout trade.
What Causes the Predictability in Forex Currency Pairs?
Listed below are some of the major predictable currency pairs:
- AUD/USD
- EUR/GBP
- NZD/USD
- EUR/USD
- USD/CHF
The predictable nature of such currencies can be traced to the fact that they all belong to developed nations, having very stable relations with each other. The movement and fluctuations in forex pairs occur due to national issues and motivators. All the major developed nations, such as the US, Britain, Australia, etc., try to maintain their currency values at controlled levels. This is not possible with the currency exchange of developing nations. However, since developed countries have some control, predictability is possible.
Another reason can be found in the fact that such nations have cordial political relations with each other. Due to political pressure, the forex regulatory authorities of such nations try to maintain currency transfer rates as close to the pre defined rates as possible.
Trading using Predictable Forex Currency Pairs
Many forex experts consider trading in the predictable pairs the safest option for limiting losses or for ensuring recurring profits. One of the most predictable forex pairs is EUR/USD. In the overbought state, this currency pair is mostly likely to pull back, whereas in the oversold state, it will tend to retrace its movement to attain stability. The same cannot be said for other non predictable currency pairs. For example, the USD/JPY currency pair, predicting its movements is considered the toughest by the expert traders.
In short, it can be summarized that trading in predictable forex currency pairs is the best option for both novice and expert traders. However, these forex pairs are not advised for those looking for greater risks.
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