The forex market is one of the best trending financial markets. This makes it an ideal choice for trend trader or momentum trades. However, some pairs clearly have trended a lot better than others in the past few years.
Perhaps the best forex trend pair in recent years has been EUR/USD or fiber. There has been a clear trend to the upside since 2001. In this period the pair has risen from around the 0.81 mark all the way upto 1.6. Around a 100% increase. Now that would have been a nice trend to ride.
Many of the Yen Carry pairs did very well in recent years, but many of those have fallen down in recent months due to all the problems in the global stock markets due to high oil prices and the credit crunch. Historically, the Yen carry trades have had considerable correlation to the global stock markets.
Another fantastic trending pair is USD/CHF, otherwise known as “swissy”. This pair has essentially been in a very long down trend since 1985. Back in 1985 the pair made a high just shy of 3 swiss francs to one. Today the pair stands around parity, but it did make a low around the 0.96 mark in 2008.
When it comes to the forex trend, it is important to remember that they cannot last forever. It is often the case at some point of “What goes up, must come down” and vice versa. This is not always true, but often. It is certainly often not a good idea to buy pairs when they are making new highs or sell when they are making new lows. This is often to late and can be very risky.
One strategy that some traders use is to identify a strong trending pair. Then draw Fibonacci retracement lines for a desired time frame and then wait for a 50% retracement of the trend, the buy or sell the currency
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