How newbies trade forex main cross-pairs: features of trade - Singapore Forex Trading, Singapore Forex Academy, Singapore Forex Association

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How newbies trade forex main cross-pairs: features of trade


EUR/GBP
Popular and most liquid cross-rate at the European session. Well gives in to the technical analysis, and estimations for fall, as a rule, are more reliable than on growth. The high cost of the point is the one dangerous factor. Strong correlation with USD/JPY was created for the last year.
In addition to regular factors, the estimation for EUR/GBP is influenced by political events of the Eurozone and Great Britain, commercial and options contracts. In the case of a reasonable money management, the intraday scalping gives considerable profit on this pair.
EUR/JPY
Highly liquid asset, especially within the European and Asian sessions. It is considered rather difficult for a short-term trade, requires the fundamental analysis of USD/JPY. The currency pair is very politized. Shows the greatest activity at the opening of the American trading session, has a strong correlation with Japanese exchange indexes, demand for the Japanese goods, futures of S&P and WTI crude oil. For lack of speculative factors is characterized by steady medium-term trends. It isn't recommended to beginners.
GBP/JPY
Thanks to active business interests between Great Britain and Japan has high volatility and average influence of dollar. Dynamics is generally provided by the Central Banks of Japan and Great Britain. While Japan holds refinancing rates about zero, the pair keeps growth in the long term.
Very active and «sharp» cross-rate, as a rule, has a high swap, the high trading volumes during the Asian and European sessions. Due to high liquidity has the smallest spread from all European yen crosses.
The estimation for GBP/JPY is influenced by energy costs, demand for the Japanese goods in the European markets, the Asian and European stock indexes. It poorly gives to a technical analysis and requires a tough money management, liquidity at the European session is maintained only by market makers. In general moves synchronously with the pair USD/JPY, especially within the Asian session. Because of the difficult base and speculative throws it isn't recommended to beginners, but in general the aggressive scalping, speculative channel strategy on breakthrough and carry trade transactions are possible.
CHF/JPY
Features of trade in European currencies in a cross with CHF are the franc/yen is considered a reliable indicator of dynamics of financial communications of Europe and Asia. Continuous currency interventions on both sides do the pair dangerous to short-term speculations. Actively reacts to any crisis situations or force-majeure which can cause a too great demand on the yen. The estimation of CHF/JPY is in addition influenced by the Asian and European stock market, actions of large speculators and any policy even if it isn't connected directly with Switzerland, Europe or Japan. It isn't recommended to beginners. Strategy: carry trade, hedging and medium-term trend.
EUR/CHF
The maximum pressure upon an asset is put by euro and yen, the influence of the American dollar is weak. The pair can move in a narrow flat for a long time, it is possible to earn on medium-term transactions. As a result of any currency interventions including verbal gives an uncontrolled reaction, therefore, it isn't recommended to beginners and short-term speculators.
GBP/CHF
Historically − the oldest currency cross-rate without the dollar, the main danger – speculative nature of GBP, but the high cost of a point in a cross gives the chance to earn on a short-term scalping. Practically repeats EUR/CHF movement, but with bigger volatility. Has characteristic turns on news: if the statistics for pound is positive, then its purchases usually weak, and in the case of the slightest negative the pound is quickly sold and take away the equity in safer CHF. It is recommended only to experienced traders.
AUD/CHF
Low liquid asset, but AUD and CHF components react with a different speed to dollar rate that allows to use its volatility as the indicator of change speed of these currencies. The pair reflects connection of the European banking capital with the raw business of Australia. It is practically not used for speculation.
Except for traditional features of trade in European currencies the estimation of AUD/CHF depends on a price dynamics on basic raw materials (gold, oil, iron ore, non-ferrous metals), Asian (Hang Seng, KOSPI, Nikkei 225, SET50, SSE Composite, TOPIX) and the European stock exchange indexes.
One of my teachers, which successfully trading USD/NOK for a lot of years, called this group of currencies «rebellious Kroner out of a zone». Today except for Great Britain, the members of the EU Denmark and Sweden doesn't include the zone of the euro. If Britain and Denmark even by preparation of the Maastricht Treaty stipulated the right to keep the national monetary unit, then Sweden has no such formal right, but also doesn't hurry to pass to euro. From the European currencies deserving attention still interesting Norway and the Czech Republic. Norwegian (USD/NOK), Danish (USD/DKK), Swedish (USD/SEK) and Czech (USD/CZK) krone obtain about 2% of trade volume of the European market.
Norway already tried to make the decision on the accession to the EU and both times (in 1972 and in 1994) the idea was rejected in the referendum.
The economy of Norway very much depends on stable supply of oil. At increase in the prices of Brent crude oil the rate of Norwegian krone sharply decreases. The country supports rigid monetary management from Norges Bank.
Sweden never brought a question of accession in euro to a national referendum. Now upon the unstable euro and threat of an exit of Great Britain from the EU, Sweden will follow British rather, than will refuse the currency.
And some words concerning Danish krone:
And though the large business of these countries takes serious steps on the way of accession to euro, the currency union with the refusal of «own» currency is perceived by the people as a threat to their welfare. All these countries, except for the Czech Republic, support steadily high level of living and aren't ready to give a financial support to weaker participants of the EU. From the point of view of the market, use of two currencies doesn't cause the conflicts, for example, the Stockholm stock exchange carries out transactions in euro since March 1999.
Denmark is the member of the EU, but as a result of a referendum in 2003 the decision to refuse transition to euro has been made.
But economic freedom which Great Britain, Denmark and Sweden use now, has the price. The macroeconomic policy of the Eurozone aside their «special» opinion, and without transition to euro, the monetary policy of these countries should be reconciled with decisions and instructions which they can't influence.
And as the conclusion …
You shouldn't forget that all specified features of trade in the European currencies are created by participants of the market, and therefore constantly change, adjusted and adapt to the current market situation. As the equal participant of the market, you independently choose a suitable trade asset including the European. Today from all European assets only EUR/USD pair give opportunities for any techniques, of course, in the case of correct fundamental analysis. For the breakthrough strategy volatile GBP/USD and GBP/JPY are recommended, for the quiet trend − EUR/AUD, EUR/CAD, USD/CHF, EUR/GBP and EUR/CHF are recommended, but let all of them will be profitable for you.
Source: http://dewinforex.com/forex-basics/features-of-trade-in-european-currencies.html