What if you could make $1,000 AUD on a currency trade? What if in a different currency pair you could make $2,000 AUD? It is impossible to predict the absolute profit in currency pairs, but examining FX rates with two different currency charts in which one currency is the same for both pairs you can get an idea of how things are trading. Take the GBP/CAD against the AUD/CAD. What differences might you see? Are there similarities? You would never trade both of these at once, but perhaps there is one of the currency pairs performing better.
Checking FX Rates for GBP/CAD Patterns
Examining different pairs like the GBP/CAD can show you how it is currently trading. If you compare it to another currency pair with the same quote currency you can usually see which pair has the larger movements to invest on. Examining FX rates for a three month period in 2013 (May-July) offers an interesting picture.
The first thing noted in the chart was a consolidation period with a lot of jagged peaks which ran for the month of May. It was not until June the pairing was able to break out of the range trading for an increase on GBP. This meant the rates went from around 1.55 and 1.57 to over 1.62. At the top of the end of June graph was a double top. Double tops according to forex experts always indicate a change for the currency pair in which a reverse will occur. Typically the first peak is higher in FX rates while the second peak is a little lower. The second peak unable to go to a new high says it is time to take profit and run. The profit was taken all the way back to the starting point before another period of consolidation for July.
Obviously trading on this information is not possible, but it should help you understand the market a little better. If you can pick out a couple of indicators like the technical and news aspects you will understand how a pair can trade.
Australian Examination of FX Rates in CAD Pairings
The AUD/CAD is much different than its counterpart the GBP/CAD for the same time period. This is something that can happen even when one of the currencies is the same. The first thing to notice is where the FX rates are. For the AUD/CAD rates went from above 1.04 to under .9600, which means the CAD gained in strength to the point of becoming actually stronger than the AUD. In the case of the GBP/CAD when FX rates dropped back to their starting point the CAD did not go below 1.000, so it remained devalued against the GBP. Yet the CAD gained in strength because it got closer to one. In the AUD/CAD case it actually flopped the strength for the CAD to be stronger, not just closer to one.
Most of the movement happened in May through mid June. After mid June the rates consolidated. There was now a range around .96 sometimes going above or below that mid-line.