Which Currency pairs Make You Money?

The EUR/USD is known as the ‘Swissie’ currency pair. The Swiss Franc is no longer in circulation in Europe. CHF is shortened for ‘Confoederatrice Helvetica’ and represents the national economy of the largely neutral international country context in the middle of Europe. It functions as the fourth largest currency in terms of a pips amount in the world.

In recent times this pair has had a volatile gain in price against the Swiss Franc. In a multitude of ways this currency pair has become highly correlated with the EUR/USD. This means that when either the EUR or the CHF is traded the other highly correlated currency can be reasonably predicted. There are several reasons for this, and primarily it is due to the fact that the Swiss government is widely recognized for being one of the most successful economic model economies in the world. The Swiss economy is widely recognized for having low inflation, prudent management of public finances, free trade, low interest rates and a competitive economy.

These factors have combined to make the Swiss economy one of the most resilient to the global financial crisis in recent times. This stability has made the franc highly correlated with the U.S. Dollar, EUR/USD and the CHF/USD currency pair. When the EUR/USD moves either up or down in price it is typically followed by the CHF/USD move either up or down in price as well. A technical trader will often see these price moves as ‘priced attacks’ where the EUR/USD is likely to reverse its recent gains and reverse direction.

An important aspect of successful forex trading is being able to determine the likely direction of any currency pair. Technical analysis is based upon the principle of resistance and support – in forex trading this is termed as a ‘forex signal’. The principle is that a currency pair’s trend will generally proceed in either one of two directions; in an up trend the EUR/USD is likely to move up while the CHF/USD is likely to move down. Technical analysts look to either confirm the uptrend in a particular currency pair or the down trend in a particular currency pair.

If you are to profit from forex trends, you should be able to identify these moves quickly and accurately. The best way to predict these movements is to use the Correlation Coefficient (CC) formula which is widely accepted as being an effective means of predicting the movement of any currency pair in real time. The CC formula uses two variables, x and y, to determine which of the currencies will move in a certain direction. The equation is as follows:

When using the CCC formula to predict where the Swiss franc will move, it is important to remember that the Swiss National Bank has a major control on the supply, demand and value of the Swiss franc. When the Swiss National Bank lowers the exchange rate of the Swiss franc against other currencies, more foreign investors will have more confidence in buying the Swiss franc and this will result in its appreciation. When the Swiss National Bank raises the exchange rate of the Swiss franc against other currencies, less foreign investors will be willing to buy the Swiss franc and this will result in its depreciation.

There are certain currency pairs, which are more susceptible to small moves in their values which may be very profitable for traders looking to profit from forex trends. These currency pairs include the EUR/CHF and the CHF/USD. These currency pairs have been extremely volatile over recent months and years and have become some of the biggest moving parts of the world markets. As the EUR/CHF has appreciated in value, more investors are looking to purchase the Swiss franc in order to take advantage of the rising value of the EUR/CHF. Similarly, when the CHF/USD falls in value, more investors have become interested in selling the Swiss franc in order to take advantage of the falling value of the CHF.

Many investors have become involved in the Forex market because they see the CHF/USD as a highly profitable trading currency pair. It has also recently become one of the top performing traded currency pairs in the world. Whether the EUR/CHF or the CHF/USD is profitable for you depends on your view of the market and on the direction it is pointing in.

Post Author: innovationeconomy_user