Currency Pair Characteristics: Secrets of Successful Traders

15 Price Action Patterns Insiders are Using If a hedge fund managers were using 15 specific price action patterns would you want to know?

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Now letโ€™s discover the different Currency Pair Characteristics!

Introduction: Currency Pair Characteristics

Every Forex currency pair has its own specific behavior, movement, and (tiny) detail that traders recognize and understand as their experience level grows. In fact, focusing on trading currencies and pairs a trader knows intensively can provide a winnerโ€™s edge. Here is an approach to currencies by Warren Buffett.

Understanding the product you are trading in more depth than others gives you home court advantage. You are on the right website if you are interested in learning more โ€˜secretsโ€™ of pairs and currencies. Below you will find a list of features. They are either common knowledge or behavior I have noticed.

This list is far from complete. Please feel free to add your experiences and thoughts to the list by writing a comment below.

PAIR #1 EURUSD

It isnโ€™t a secret that the EURUSD attracts the biggest trading volume in the Forex market. Therefore, it is the biggest pair with the lowest spreads available. A few observations:

  • The EURUSD is heavily impacted by news events such as the NFP, FOMC, quantitative easing, Eurozone struggles.
  • Most of its movement is made during the London session, but it typically does not make a ton of movement in a day.
  • Its daily range is about average.
  • I have noticed that the EURUSD likes to keep pushing in one direction for most of the trading day and that the pair often prefers deeper Fibonacci levels.
Currency Pair Characteristics
20 11 2014 gbpusd

PAIR #2 GBPUSD

The GBPUSD commonly spikes up and down. It is well-known for its volatility and big movements. Observations:

  • The Cable makes the most movement during the London session;
  • During the London open it likes to make spikes up and down and often encounters false breakouts;
  • Price likes to challenge support and resistance;
  • GBPUSD often retraces to deeper Fibonacci levels like the 78.6 and 88.6;
  • Its daily range is usually quite high;
  • Itโ€™s a pair that likes to make spikes against the trend and in those cases, it is, therefore, an interesting pair to trade against the momentum;
  • On many trading days, there is a GBP news event which heavily impacts this pair and the market can remain quiet till the news event is over;
  • The pair is heavily impacted by news events such as the NFP, FOMC, quantitative easing, Eurozone struggles.
  • I have noticed that the start of the reversals is often very choppy, corrective and slow.

PAIR #3 USDJPY

The USDJPY is another pair that is heavily impacted by the big US Dollar news events. Observations:

  • When the USDJPY is in a consolidation, it can really slow down tremendously and the range often is ultra small;
  • When the USDJPY is in a major trend, it usually continues in that trend with no major or large pullback. It keeps pushing and pushing and only pauses for a smaller bear or bull flag break;
  • In a trending mode, the typical Fibonacci levels for the USDJPY are 23.6 and 38.2 Fibonacci retracement levels.
Usdjpy
20 11 2014 usdjpy

PAIR #4 AUDUSD

The AUDUSD is the opposite of the GBPJPY or GBPUSD as itโ€™s more of a slower mover. Observations:

  • Price will keep pushing in one direction but will frequently face pullbacks before continuing with the trend;
  • The Aussie news event often has a big impact on Aussie pairs;
  • The AUDUSD is a pair that moves quite a lot during the Asian session, but also moves decently in London and New York sessions;
  • The Aussie currency is heavily tied to commodities, Australian exports, and Chinese economic data (such as import, export, and manufacturing);
  • The AUDUSD is therefore also known as a โ€œrisk off-risk onโ€ currency pair. With risk-on the AUDUSD price goes up, with risk-off the USD is in demand and the AUDUSD goes down.

PAIR #5 EURJPY

Main observations:

  • The EURJJPY moves a lot of pips as well: more than the USDJPY but less than the GBPJPY;
  • It is more suitable for all types of traders;
  • The EURJPY often has chart patterns such as the bear flag and bull flag on its chart.

PAIR #6 GBPJPY

Main observations:

  • The GBPJPY moves a ton of pips and has massive volatility;
  • In fact, the GBPJPY is probably on average the pair with the biggest movements and its nickname the Ferrari refers to its speed of movement;
  • It is not a recommended currency pair for traders who just started trading.
Gbpjpy
20 11 2014 gbpjpy

PAIR #7 EURAUD AND GBPAUD

Main observations:

  • These currency pairs are big movers as well and roll up and down quickly;
  • These currency pairs often are in trending mode which lasts for quite a long time.

PAIR #8 USDCAD

Main observations:

  • The USDCAD is nicknamed the Loonie, apparently because of its crazy moves up and down;
  • The volatility is not that drastic in my opinion but can pick up with oil-related news events.

PAIR #9 USDCHF

Main observations:

  • There is historically high correlation with the EURUSD;
  • The โ€œSwissyโ€ often increases in value when there is a โ€œflight to safety.โ€

PAIR #10 EURGBP

Main observations:

  • The EURGBP is a slow-moving pair on average with low levels of volatility;
  • But despite the lower movement, it does have occasional nasty spikes.

Conclusion: Currency Pair Characteristics

Please add to this post your thoughts, comments, tips, tricks, and more below.

Thank you for sharing Currency Pair Characteristics and wish you a grand weekend and Happy Hunting!

P.s. Oh and donโ€™t be scared to share your wisdom on any of the pairs or currencies, as people who will read this blog are not going to cause your edge to disappear โ€“ the market is too big for that. Leave a comment below with interesting things you have noticed with pairs and currencies!

Thank you for reading!

Please leave a comment below if you have any questions about currency pair characteristics.

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15 Price Action Patterns Insiders are Using If a hedge fund managers were using 15 specific price action patterns would you want to know?

6 Comments

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    • Hi Reddy, glad that you found the article useful! Always good to hear that. Thank you for taking the time to place a post!

  1. After being a Pro trader in both Technical and Fundamental base you can imagine how confident are you to push trades, the downside of this is you will generate the habit of not accepting early that you made a bad call and you might end up with big losses while figuring out what is causing the market to behave in the opposite way.
    This was a case for me, Lost thousands of Dollar with the deficit of this little knowledge ( Currency x-stics)
    Learned in a hard way and this article is worthy reading.
    Addition to that.

    1).Aud & Nzd tend to move in unique design allowing traders to Swing trade these pairs. They have little pullbacks once they establish a trend.

    2). Gbp like you explained above. I call it double momentum, they induce a strong Momentum in one and move in the other probably based on the Net volume of Buyers and sellers. Not good for swing trade in my opinion

    3). Chf & Jpy moves aggressively during moments of uncertainties. They tend to move fast. They can create FOMO and get you entering trades at bad prices if you are not careful

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