Differences | Forex Blog

July 30, 2009

How to decide on which currency pair to trade: EUR/USD or GBP/USD

Filed under: Forex News — Tags: account, charts, daily, declining, differences, fuels-the-fire, gbp, markets, money, moving-average, pick-on-which, resistance, time, upward-as-shown, will-ultimately — admin @ 8:29 am

Many times, traders wonder “which pair is the better pick”. I say, let the charts decide it for you and take all of the guess work out of it.

Since both the EUR/USD and GBP/USD have the USD in common, their differences are EUR and GBP. So if we got a “dollar move” they’re both going to be affected some. However, the real difference comes in when you directly compare EUR to GBP and see which is the stronger/weaker currency.

You can do this by looking to the EUR/GBP pair. Right now, EUR/GBP is in an obvious downtrend. This can be seen by the red downtrend line below. It can be seen by the declining 50 day simple moving average (SMA). It can also be seen by the MACD being below the zero line and its lines crossing over to the downside. This can also be seen, most recently from it breaking down out of its upward correction (red circled area). Click on the chart below to enlarge it.

Therefore, CLEARLY right now, the stronger of the two is the GBP/USD. So if you feel that these pairs are headed higher, then go with GBP/USD. Right now, GBP/USD’s daily trend is upward, so that would be my pick.

Now if you felt that the trend was downward or turning downward, then you’d pick the “weaker candidate” to pick on which would be EUR/USD (buy strength/short weakness). However, right now, so far their daily trends are still upward as shown by the 50 period simple moving average on their daily charts.

Notice though, how much EUR/USD is struggling and how GBP/USD is starting to pop up higher right now. That’s due to the advantage of buying the stronger candidate. And right now, that’s GBP/USD when you directly compare the two.

You can do this for any pairs. For instance, now if I wanted to see if GBP or AUD were the strongest, I could look to the GBP/AUD pair. This could give me a bias as to whether I’d be better off buying GBP/USD or AUD/USD, for instance.

Currencies are a “comparative/relative” game. In other words, you always want to “rig the fight” with the absolute strongest candidate vs. the absolute weakest candidate and then “bet on that match” by buying the stronger vs. the weaker.

This, coupled with great risk management, will greatly improve your odds of success in trading. In other words, don’t over-leverage your account. You should probably be trading no more than 1 standard mini lot per $2,000-$3,000 in your account OR 1 micro lot per $200 to $300 in your micro account.

Sean Hyman

www.forextradingblog.com

P.S. - Want to learn more about fundamentals and technicals? Sign up for an inexpensive, only forex course today and we’ll show you how: http://www.mywealth.com/currency-trading.php

Also, get a free, real time demo trading station here: http://www.fxedu.com/practice-forex-account

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EUR/CHF launches another 60+ pips and counting!

Filed under: Forex News — Tags: article-and, differences, fuels-the-fire, has-launched, hyman, markets, new-highs, pick-on-which, pips-and, time, upward-as-shown, video-for, view-the-full — admin @ 8:12 am

Yesterday, I wrote an article and did a YouTube video for our partner, mywealth.com. Since the release of that article, EUR/CHF has launched forward another 60+ pips and counting. It’s literally hitting new highs as of this writing.

To view the full article and video, check it out here: http://www.mywealth.com/blog/post/potentially-safest-forex-play-entire-fx-world

Enjoy!

Sean Hyman

www.forextradingblog.com

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July 28, 2009

AUD/USD broke higher as expected!

Filed under: Forex News — Tags: a-clear-hint, australia, australian, developed, differences, glenn-stevens, governor, hold-the-pair, markets, new-highs, pair, policy-presents, recession — admin @ 8:29 am

AUD/USD broke higher as expected. It’s superior fundamentals have continued to cause it to head higher, especially when directly compared to the weak fundamentals of the U.S. and its dollar.

See the comments from RBA Governor Stevens below:

Reserve Bank of Australia Governor Glenn Stevens struck a decidedly hawkish tone at a speech in Sydney, driving home the point that going forward the central bank is now actively trying to time a return to higher interest rates. Stevens said Australia is faring better through the global downturn than other developed economies, noting that “confidence has recovered ground” and boasting that “unemployment is rising slower than expected”. He went on to stress that central banks should not relax their commitment to keep inflation anchored through the recession, a clear hint that global tightening of monetary policy should now be on the table. That said, Stevens conceded that some stimulus needs to remain in place for now and conceded that the timing of unwinding expansionary policy presents a challenge. The market greeted the RBA chief’s comments, with the Australian Dollar surging 50 pips in a mere 30 minutes.

EUR/CHF continues its overall ascent, as expected. The SNB continues to hold the pair above 1.52 and its only a matter of time before we see the high 1.53’s. Keep in mind too, that through our broker, you do earn some interest on this on a daily basis too (on their standard mini accounts). Not all have this on this pair right now.

Sean Hyman

www.forextradingblog.com

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July 27, 2009

AUD/USD prepares to bolt higher!

Filed under: Forex News — Tags: central, differences, glenn-stevens, governor, higher-bottoms, most-important, swiss-national, trumps-support, update-on-eur — admin @ 9:38 am

Trend trumps support/resistance! As you can see on the chart below, the trend’s direction is THE most important thing (green moving average line). The uptrend has prevailed through many black resistance lines before and it’s about to do it again, after a resting/consolidation phase.Click on the chart to enlarge it.

Aussie’s inflation is still high…it’s rates are the highest among the industrialized nations and the world needs its commodity exports. The global economy is recovering…China is buying up commodities to fuel its expansion…and Australia is the beneficiary of all of this.

Update on EUR/CHF: It continues to make “higher bottoms” as the Swiss National Bank, their central bank, continues to “sell francs vs. the euro. This continues to gradually push EUR/CHF higher.

Sean Hyman

www.forextradingblog.com

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July 24, 2009

It appears the Swiss keep “raising the floor” on the EUR/CHF trade!

Filed under: Forex News — Tags: and-technicals, central, constant, differences, glenn-stevens, governor, into-the-market, their-automated, time, trend-following, trumps-support, update-on-eur, which-produce, widely-watched — admin @ 8:46 am

Okay, I realize that this isn’t the only pair out there. However, it is likely the ideal candidate right now as it likely has much more upside potential than downside due to the constant intervening of the SNB - Swiss National Bank (Switzerland’s central bank).

Also, keep in mind, the trend is now upward recently…and no longer downward. Being that the EUR/CHF is one of the more widely watched/traded pairs by institutions (which produce such enormous volume for a “cross pair”), it won’t be long before their automated “trend following” programs kick in and aid the central bank’s efforts.

And…it appears that the SNB keeps going into the market and selling francs “sooner and sooner” all the time. See how it continues to “raise the floor” for the EUR/CHF pair. Click on the chart to enlarge it.

Sean Hyman

www.forextradingblog.com

P.S. - Want to learn more about fundamentals and technicals? Sign up for an inexpensive, only forex course today and we’ll show you how: http://www.mywealth.com/currency-trading.php

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