Currency Ranking and Forex Pair Trading Direction
The ranking of the currencies plays a critical role in their performance as pairs. Whenever a higher ranking currency is the top pair, the trading direction tends to be upward or long.
Conversely whenever a higher ranking currency is the base pair, the trading direction tends to be downward or short. The farther apart the ranks, the sharper the directionality.
The currently observed ranking of some selected currencies is as follows: CAD>EUR>NZD>AUD>GBP>USD>JPY.
Thus by default, (see above chart)
EUR/CAD will be a short trade
EUR/NZD will be a long trade
EUR/AUD will be a long trade
NZD/CAD will be a short trade
EUR/GBP will be a long trade
EUR/USD will be a long trade
AUD/CAD will be a short trade
GBP/NZD will be short trade
GBP/AUD will be a short trade
GBP/CAD will be a short trade
GBP/USD will be a long trade
GBP/JPY will be a long trade and
USD/JPY will be a long trade
CAD/JPY and EUR/USD should have the sharpest directionality because they are farthest apart in rank.
Even where a new position starts out in an opposite direction, tracking and retrading the currency pair until it records positive P/L is all that needs to be done. Once a stable profit line is established the position may show positive P/L for a long time. (See much Forex updates).
To avoid even starting out a position with high negative P/L, I use Chandler ' Momentum Oscillator (CMO) and Full Stochastics indicators to synchronize the predicted market direction and the indicated market directions.
To qualify for trade, a Forex pair must show progressive increase or decrease in price across the H4, D1, W1 and M1 periods. Pairs with prices progressively increasing are bought, while those with progressively decreasing prices are sold.
Use Elliot's Wave (EW) and Volatility Switch (VS) indicators to ensure that price and volatility are trending in the same direction.
Flip-flopping across the zero line disqualifies any pair that exhibits it.
Again, the market has a mind of its own and some times breaks all the rules in the books. In such situations, I recallibrate my indicators with the forex pairs that are performing as predicted.
The ranking of the currencies plays a critical role in their performance as pairs. Whenever a higher ranking currency is the top pair, the trading direction tends to be upward or long.
Conversely whenever a higher ranking currency is the base pair, the trading direction tends to be downward or short. The farther apart the ranks, the sharper the directionality.
The currently observed ranking of some selected currencies is as follows: CAD>EUR>NZD>AUD>GBP>USD>JPY.
Thus by default, (see above chart)
EUR/CAD will be a short trade
EUR/NZD will be a long trade
EUR/AUD will be a long trade
NZD/CAD will be a short trade
EUR/GBP will be a long trade
EUR/USD will be a long trade
AUD/CAD will be a short trade
GBP/NZD will be short trade
GBP/AUD will be a short trade
GBP/CAD will be a short trade
GBP/USD will be a long trade
GBP/JPY will be a long trade and
USD/JPY will be a long trade
CAD/JPY and EUR/USD should have the sharpest directionality because they are farthest apart in rank.
Even where a new position starts out in an opposite direction, tracking and retrading the currency pair until it records positive P/L is all that needs to be done. Once a stable profit line is established the position may show positive P/L for a long time. (See much Forex updates).
To avoid even starting out a position with high negative P/L, I use Chandler ' Momentum Oscillator (CMO) and Full Stochastics indicators to synchronize the predicted market direction and the indicated market directions.
To qualify for trade, a Forex pair must show progressive increase or decrease in price across the H4, D1, W1 and M1 periods. Pairs with prices progressively increasing are bought, while those with progressively decreasing prices are sold.
Use Elliot's Wave (EW) and Volatility Switch (VS) indicators to ensure that price and volatility are trending in the same direction.
Flip-flopping across the zero line disqualifies any pair that exhibits it.
Again, the market has a mind of its own and some times breaks all the rules in the books. In such situations, I recallibrate my indicators with the forex pairs that are performing as predicted.
Mecrandie