When you’re building a list of forex pairs to target through a swing trading strategy, there are a few basic characteristics you want to prioritize to identify the strongest trading opportunities possible. Any currency pair is going to offer price movements that create swing trading potential over time, but if you’re serious about swing trading, you want to limit your focus to the pairs that offer the highest profit potential through this trading strategy.
In general, the best swing trading forex pairs are going to offer excellent liquidity, and enough volatility to create price movements that lead to swing trading opportunities—but not so much volatility that it’s hard to predict how the price movements and trajectories will play out over time. Additionally, the volatility needs to generate price movements over a relatively short period of time, somewhere between days and weeks.
Although it’s not as aggressive as scalping or day trading, swing trading is still best done within shorter time frames that allow traders to capture profits quickly. The longer you have to wait to realize a profit, the less lucrative this strategy will be over time.
With that said, here are six excellent forex pairs to start following in your swing trading strategy.
As one of the larger, more stable currency pairs, EUR/USD doesn’t provide enough volatility to offer value to most day traders. But for swing traders, there’s potential to turn a profit over a multiday or multiweek position. And although the volatility isn’t ideal, the high liquidity of the EUR/USD forex pair lends itself well to swing trading, especially for beginners looking for straightforward forex pairs to cut their teeth on.
Known as a major commodity forex pair, NZD/USD is great for swing trading because its price swings are often correlated to movement in a commodity market. In the case of NZD/USD, that market is dairy: New Zealand is a top-five global exporter of dairy, and the combination of this market influence with the high liquidity and volatility of this forex pair makes it a great option for swing traders to follow.
As a major currency pair, EUR/JPY offers high liquidity that appeals to swing traders. But it’s also heavily influenced by broad market trends and sentiments. Current economic events in either Europe or Japan can have a direct impact on this forex pair, creating reliable technical indicators that swing traders can use to turn a profit.
Like NZD/USD, USD/CAD is considered a commodity pairing based on the large role oil plays in Canada’s gross domestic product, as well as America’s heavy consumption of this commodity. As a result, USD/CAD often moves in correlation with the oil market, which can facilitate an easier evaluation of whether the pairing is a good option for swing trading at any given time.
The third and final major commodity forex pairing, AUD/USD is heavily influenced by the precious metals and other exports leaving Australia, and the international market for those commodities. Because of its strong economic relationship with China, the AUD/USD pairing is great for trading on the fluctuations in the Asian and American markets. This pairing also offers high liquidity, which will attract swing traders who are eager to capture quick profits.
Although EUR/CHF typically offers low volatility, which makes it an unattractive option for short-term traders such as scalpers and day traders, it does offer just enough volatility, combined with high liquidity, to make it an attractive option for swing trading strategies. The pair’s long trend movements serve as one of the great advantages of swing trading EUR/CHF, allowing traders to use technical indicators to identify opportunities early in their development. This gives swing traders an opportunity to maximize their profits by opening a position and riding the price gain or loss for the bulk of this long trajectory.
As you get started with forex swing trading, it’s important to watch a wide range of pairs so you can identify the best opportunities. If you limit yourself to monitoring only a few swing trading options, you’re likely to miss out on high-value trading opportunities. Swing trading is most successful when you keep your options broad and use technical analysis to identify the best price swing potential at any given time, so use the above forex pairs as a starting point for building out your watch list.
The more pairs you’re able to monitor, the more successful your swing trading strategy will likely become over time.
The information provided herein is for general informational and educational purposes only. It is not intended and should not be construed to constitute advice. If such information is acted upon by you then this should be solely at your discretion and Valutrades will not be held accountable in any way.