Currency Personalities Revisited

There is yet another good article in Stock, Futures, and Options Magazine that identifies personality traits of the major currency pairs.  The author feels that there should not be a one-size-fits-all technical approach to all currency pairs but instead different technical strategies for each. 

EUR/USD 

1. Depth of liquidity means that this pair experiences prolonged, inconclusive tests of technical levels
2. Breakout traders need to allow for a great margin of error: 20-30 pips
3. If USD/CHF and GBP/USD have broken equivalent technical levels, EUR/USD is likely to do the same after a lag
4. Momentum indicators are well-suited
5. Reliance of short-term indicators (30-minute) exposes traders to an increased likelihood of whipsaw movement
6. MACD is well-suited because it utilizes EMA resulting in fewer false crossovers
7. When large movements under way, DMI is useful for confirming whether a trend is in place.  If so, momentum indicators should be discounted and reliance might be placed on DI+/DI- crossovers 

USD/JPY

1. Most politically sensitive pair
2. Heavy influence exerted by Japanese institutional investors and asset managers
3. Cluster of orders at similar price or technical levels
4. Similar clusters of stop loss orders
5. Frequent encounter with support or resistance at numerically round levels
6. Trendline analysis most fitting
7. Ideal for breakout traders who employ stop-loss entry orders on breaks of trendline support or resistance
8. Short-term trendlines can be effective
9. Heavy reliance on candlestick charts
10. Daily close candlesticks are highly reliable leading indicators
11. Trend over the medium-term
12. Look to trend following tools such as MA(21, 55 are heavily used), DMI, Parabolic SAR
13. Momentum indicators such as RSI, MACD, or stochastics should generally be avoided, especially intraday due to trending and institutional nature driving this pair (INTERESTING??)
14. Ichimoku analysis 

Click Read More to see Pound and Swissy Characteristics

GBP/USD

1. Reaction to US and UK fundamental data
2. Price action has a one-way tendency during larger moves
3. More proactive risk management
4. Watch short-term false breaks of chart levels
5. Focus on charts > 240-minutes
6. For those positioned with a move, trailing stops with Parabolic SAR are well suited
7. Longer-period oscillators can be used to highlight potential reversals or divergent price action
8. Momentum signals should be confirmed by break of trendlines, Fibonacci retracements, or parabolic levels
9. Frequently exceed 61.8 retrace, only to stall at 76.4 level. 
10. Williams %R is well suited with overbought/oversold bands adjusted to -10/-90 

USD/CHF 

1. Trades mostly based on overall U.S. dollar sentiment
2. Leading indicator for major U.S. dollar movements
3. False break of technical levels common
4. Not unusual for price to trade 15-25 points through support/resistance before reversing
5. More proactive risk management
6. Watch short-term false breaks of chart levels
7. Focus on charts > 240-minutes
8. For those positioned with a move, trailing stops with Parabolic SAR are well suited
9. Longer-period oscillators can be used to highlight potential reversals or divergent price action
10. Momentum signals should be confirmed by break of trendlines, Fibonacci retracements, or parabolic levels
11. Frequently exceed 61.8 retrace, only to stall at 76.4 level.
12. Williams %R is well suited with overbought/oversold bands adjusted to -10/-90 

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