Posted: 09 Dec 2009 12:00 AM PST

Newcomers to forex trading usually start off with the popular pairs: EUR/USD or GBP/USD. While these pairs are OK, these might not always be the best pairs to start trading with. I’m fond of the Australian dollar – AUD/USD, and I find it the most predictable pair. I chose this pair based on my experience and my observations. Using Currensee’s social indicators, I found that I’m not alone.

The British Pound and the Euro are popular currencies. Many forex traders start with these pairs since they hear about them all the time. You hear about them all the time from brokers who offer low spreads on these pairs. Also on the web, these pairs are talked about very often, sometimes too often.

This talk can be too much, even confusing. Well, there are other pairs out there. Brokers don’t offer the best spreads on them, but we aren’t here for gaining an extra pip on the spread, but making more winning trades.

In my post about the 5 most predictable currency pairs, I ranked AUD/USD at the top of the list, followed by EUR/GBP. This was based on my experience and my constant observation at the markets. More predictable currency pairs obey the rules of technical analysis better than others. A distinct support or resistance line, will be the spot where the currency turns around, or if it breaks the line, it will go further in that direction. Predictable pairs have less false breaks.

Now my observation is supported by Currensee’s social indicators. I took a look at the community’s activity, which is based on real trades, and saw that 91% were winning on AUD/USD, taking long positions. Such a landslide victory means that the this is a very predictable pair, especially when the community was trading with the trend.

As you can see, at the time of writing, EUR/GBP, my second pick wasn’t doing well. Also note that the popular pairs, EUR/USD and GBP/USD made unexpected moves, to say the least. At the time of taking this screenshot, no one was reading these pairs correctly.

As the Currensee community grows, more trades will be listed, and these social indicators will be of higher significance. Viewing these social indicators will be a treasure to new forex traders.

Further reading: The Currensee community foresaw the dollar’s strength after the Non-Farm Payrolls – a post that I wrote for the Currensee blog.

Forex Daily Outlook – December 9th 2009

Posted: 08 Dec 2009 02:18 PM PST

The focus today will be on the British government’s Annual Pre-Budget Release, which is expected to encounter the huge deficit. We also have a rate decision from New Zealand among other events. Let’s see what’s up for today:

British figures start the day again: Nationwide Consumer Confidence is released 36 hours before the rate decision and is expected to tick down from 72 to 71. Later in Britain, Trade Balance is predicted to show a smaller deficit, of 6.9 billion, less than last month’s 7.2 billion.

The biggest event in Britain is the Annual Pre-Budget Release, which will show what the British government sees for the economy, an election year in Britain. This report will also speak about the huge deficit that Britain has.

For more on the British Pound, read the GBP/USD Forecast.

In Australia, Home Loans are predicted to drop by 1.8% after a big leap last month 5.1%. Australian estimations tend to be pessimistic, so a better result sure is possible. At the same time, Australian Trade Balance is expected to show a smaller deficit – of 1.78 billion this time.

For more on the Aussie, read the AUD/USD forecast.

Swiss Unemployment Rate is expected to edge to 4.2%. USD/CHF is now far from parity. Tomorrow’s rate decision is very important for the Swissy.

In Europe, Final CPI will be posted in Germany, and is expected to confirm another month of price drops. Later in Europe, Axel Weber, the head of the German Bundesbank will speak, and might move the Euro.

Read more about the Euro in the EUR/USD forecast.

The rate decision in New Zealand isn’t expected to be dramatic. The Official Cash Rate is expected to remain unchanged at 2.5%. The RBNZ Rate Statement isn’t expected to speak about future rate hikes.

Alan Bollard already set a long course for future rate hikes in a previous rate decision that didn’t meet expectations. His press conference isn’t expected to supply dramas.

Near the end of the day, Japan’s Core Machinery Orders will be released. They’re expected to drop by 4.4% after last month’s 10.5% jump.

That’s it for today. Happy forex trading!

Pound to climb up the mound?

Posted: 08 Dec 2009 01:53 PM PST

Some good news for the Pound today – growth has returned to the UK according to the unofficial NIESR GDP estimate. This news was unnoticed. Looking at the near past, this institute was very accurate. Here is how you can use this info in the future.

The National Institute for Economic and Social Research (NIESR) has published the monthly GDP estimate for the three months ending in November. Their estimate showed growth of 0.2% in GDP in these three months. In the accompanying statement, they said that the economy has recovered from the weakness that it showed during the summer.

This news went unnoticed in the major news agencies, and no impact was seen in the forex markets. GBP/USD continued trading around 1.63 before and after the release at 15:00 GMT. No other major or minor events happened at the same time.

This isn’t the first time that this institute is ignored. I find this unjust. The NIESR institute foresaw the Q3 contraction. Before the the preliminary release of the GDP for the third quarter, the wide consensus of economists quoted by mainstream media talked about a return to growth – the end of recession in Britain, like all the other Western countries that enjoyed growth in Q3. Some already enjoyed growth in Q2.

Well, this Q3 contraction didn’t come as a surprise to people who followed NIESR – in their monthly estimates they didn’t see growth in Q3 – and indeed, no growth was seen. Most forex traders read the official expectations, and were shocked by the results – GBP/USD plunged – so did Pound crosses.

I’ll keep following their monthly releases of GDP. They proved to be much closer to the real result than consensus of economists. If these good results will continue – expect strong Q4 growth, at a very expected rate.

Forex technikal and fundamental analysis

Dec 9, 2009

Forex Crunch Finding the more predictable currency pairs with social indicators

Forex Crunch Finding the more predictable currency pairs with social indicators

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