July 31, 2014
Why The EUR/USD And EUR/GBP Pairs Have Become Harder To Trade In 2014
Two of the most popular forex pairs amongst traders are the EUR/USD and EUR/GBP pairs, but if you trade these pairs on an intraday basis, you may well have noticed that they have become quite hard to trade in recent times.
There is a good reason for this - the average daily trading range of both of these pairs is the lowest it's been for a long long time.
Take the EUR/USD pair, for example. In 2011 this pair had an average true range (ATR) of between 105 and 190 points per day during the course of this year, 67 - 125 points in 2012, 63 - 120 points in 2013 and around 60-70 points at the start of this year. So there have always been plenty of points available for short-term traders.
The average true range at the moment, however, is just 37 points, which is the lowest I can ever remember.
It's a similar story on the EUR/GBP pair. This has always been a slow moving currency pair with relatively small price movements each day, but you could always rely on it having an average trading range of around 40-50 points every day.
Now, however, it is trading in a narrow range of just 25 points every day on average, which again is the lowest I can remember it being.
So hopefully you can see why these two pairs have become so hard to trade in 2014. With such a narrow trading range it is a lot harder to make consistent profits because the intraday trends are obviously a lot smaller and the price moves run out of steam a lot quicker. Plus of course the spreads will start to eat into your profits when the price moves are so small.
If you do want to continue trading these pairs, you might want to consider lengthening the time frames that you look at because there are still decent profits to be made from the 4 hour and daily charts, for example, or you could consider trading one of the more volatile pairs, such as the GBP/USD or the GBP/JPY, for instance, if you still want to trade the short-term charts.