The EURUSD currency pair is the most liquid and most traded instrument in the Forex market. It, therefore, attracts a lot of attention from retail traders as well as pros, such as the big banks and institutions that professionally trade Fx. If you are familiar with the Forex market to some degree, you probably already know or have come to understand that every currency pair behaves slightly differently on the charts, even when it looks similar. In a way, every currency pair has its own unique personality and most often behaves in line with this “personality”.
GBPUSD usually exhibits very trending price action that is very specific to this pair only. When a trend starts on “Cable”, the price can travel great distances without much looking back or pausing. Trends are also often thrusting with tall candles followed by tight consolidation. Sometimes retracements are also volatile, with tall candles in the opposite direction of the trend.
AUDUSD is the first commodity currency pair that we will discuss in our series on the characteristics of price action of the different major Forex currency pairs. Also known simply as the “Aussie”, the AUDUSD currency pair very often trends at a very gradual pace with the price moving back and forth – often drawing a stairways alike formation on the charts. Fast and sharp one-way moves are rather uncommon and instead, the price action tends to move in a zig-zag fashion.
Whenever we are discussing the Japanese Yen and its trading characteristics in the Fx market, the first thing that comes to mind is risk sentiment. The USDJPY pair is the major Fx pair that is most famous for its sensitivity to risk. Risk on and risk off changes in the market are often the main drivers of the USDJPY exchange rate.
NZDUSD most of the time trades in a swingy fashion. That is the price tends to move in swings which is probably what makes the pair very well suited for swing trading. The quite often and frequent formation of trendlines and channels further strengthens the swing trading characteristics of the NZDUSD major pair, but also of other NZD pairs too.
The Swiss Franc has the desirable characteristics of a safe haven asset or currency like the Japanese Yen and the US Dollar. Any CHF currency pair in the Fx market, therefore, has a strong relationship with the general risk sentiment across markets. The typical behavior is a depreciating Swiss Franc (CHF pairs rising) in a risk appetite environment and a strengthening Swiss Franc (CHF pairs falling) in a risk-averse (risk-off) market environment.
USDCHF is another major currency pair that is closely tied to risk appetite and risk aversion in the markets. The price behavior is often affected by it and traders who intend to trade the USDCHF pair should keep these risk sentiment related factors in check. Volatility is normally low on USDCHF compared to other Fx pairs, usually around 50-60 pips, but can rise significantly in times of risk aversion.
EURJPY is another Forex pair that is high on the list of “proxy” currency pairs for the risk sentiment in markets. The two currencies that comprise this pair, the Euro and the Yen have different roles in the Forex market. The Japanese Yen is considered a safe haven currency while the Euro has a status of a risky currency. As a result, when risk appetite is driving markets EURJPY tends to rise in an uptrend by default and when risk aversion kicks in as a general rule the EURJPY pair will switch to a downtrend.
USDCAD is another commodity currency pair that we will review in our series on the behavior of price action of the different Forex pairs. Widely known as the Loonie Dollar, CAD is also displaying the characteristics of a commodity related currency and is therefore usually driven by movements in commodity prices, mainly oil.
1-minute charts can be your best friend when your objective is to execute fast intraday trades. Due to its very nature, it will provide nothing but the most recent information regarding pricing, and you need to be able to identify chart and Price Action patterns that are relevant to such timeframes.