Top 5 Most Predictable Currency Pairs for Q4 2016

As the fourth quarter of 2016 heads into full swing and with another two months left, there are plentiful opportunities for forex traders as far as the currency markets go. If you are looking for potential trading opportunities over the medium term, these top 5 most predictable currency pairs are worth looking into for Q4 2016. Of course, if you are a volatile trader, then trade any USD Forex pairs for Q4. You are in for a ride… hopefully a good ride.

#1. Gold

The strong rally in gold which started earlier this year looks to have hit a temporary pause. However, on a closer observation, it looks like that the fourth quarter could see gold prices dip lower. Most traders are likely to make the mistake of buying gold, based upon how the precious metal reacted last year to the Fed interest rate hike. In the near term, gold prices can be seen retesting the $1300 an ounce level, but this is marked with strong resistance near 1323 – 1309. A retest to this level and failure to breakout higher will signal further declines in gold, towards 1215.00.

#2. NZDUSD

The Kiwi has been in a steady decline since 2014, but on a year to date basis, the kiwi is up 5%. This could however change as monetary policy divergence will be the key driver. In Q4 2016, the RBNZ is expected to cut rates while the Fed is expected to hike rates. This could potentially weigh on the NZDUSD keeping the bias to the downside. The technical chart (monthly) shows a bearish close in October with a shooting star pattern with the reversal formed near 38.2% retracement of the previous downtrend and a previously held support level that was challenged for resistance. Adding to this is the hidden bearish divergence on the Stochastics, all of which points to downside in NZDUSD.

• Look for NZDUSD to trade between 0.7200 and 0.6800.
• Short positions are recommended in NZDUSD for a target to 0.6800

#3. WTI Crude Oil

WTI Crude oil closed October on a bearish note after testing highs of $52.25. The bearish close coincides with the resistance level near 47.70 – 48.00, which saw prices turning bearish previously in July this year. The Stochastics shows the hidden bearish divergence near this level which indicates a downside weakness in crude oil prices. Bear in mind the November 30th OPEC meeting Vienna, where OPEC leaders are expected to chalk out a production cut/limit deal. This issue has been at the heart of the oil prices this year, with the previous deal on Doha falling apart and the latest deal in Algiers on shaky ground. The technical chart for WTI crude oil shows potential weakness to the downside, towards $41.00 handle.

WTI Crude Oil: Looking bearish to $41.00

• Look to sell Crude oil into the OPEC meeting, targeting $41.00
• Further weakness could see oil prices likely to fall towards $30.00

#4. AUDJPY

Last month’s candlestick closed above the doji making it into a bullish continuation pattern. Although the RBA held interest rates steady in November, the prospects for future rate cuts cannot be ruled out. Still, with the recent uptick in inflation, the RBA is likely to wait for a full quarter of economic data before attempting to change interest rates further. Therefore, the Australian dollar is very likely to push to the upside. The technical pattern shows prices currently breaking out from the falling price channel. Expect some consolidation near 78.61, while the longer term target remains to the upside to 91.21.

• AUDJPY likely to see further upside towards 91
• RBA expected to hold rates in Q4, BoJ could see further expansion in the quarter

#5. EURJPY

EURJPY has been trading flat for the four months within the ranges of 118.45 and 110.79. This flat price action could continue unless the range high or low is broken. We do know from the chart however, that the downside is limited to 110.790. However, price was rejected near this level and therefore we expect to see a more firm test of this support level. In the near term, EURJPY could remain flat but the downside could see 110.790 being tested. The declines could remain limited here which could then be followed by a rally to 118.45 and eventually targeting 126.80

• EURJPY remains flat but watch for a dip to 110.79
• Strong rally expected from 110.79, targeting 118.45 and 126.80

Hopefully you found this list to be useful. If we have enough comments, we will continue with this list every quarter. USD or any USD pairing did not make it to this list this quarter mainly because of the US election on the 8th Nov 2016. It’s gonna be crazy volatile for any USD Forex pairs. Good luck and remember to comment below.