FX Prices and Currency Market Deviations

Normal traded currency Markets taken as a price whole deviate about 200 – 400 high side pips. This is fairly standard year to year. Small deviations however turn into large deviations then revert back to small deviations again. Then the cycle repeats again. Every year and  once in every year, deviation opportunity strikes and this is the actual time to trade in any given year as the year’s best and easiest trades become available. An entire year of trading can exclude in favor of the year’s easiest trades as traders will stack money faster than has ever been seen.

Few traders fully understand such concepts as the game of trading is actually Ping Pong matches between and among currency prices as well as USD Vs Non USD paired relationships to cross pairs. Stock indices contain the same deviated abstractions but at most is 600 points. From the 2893 SPX top for example, SPX is allowed a deviation to 3400’s.

The requirement is understand how to calculate deviations, understand long / short strategies then pick most opportune pairs to trade.

Last March / April 35 posted trades were traded against the year’s deviation at 600 pips. Deviated were majority cross pairs while USD and non USD pairs were fine. This year’s deviation majority are located in USD V Non USD Pairs while most cross pairs are fine. Fine means non deviated pairs remain stasis to allow deviate pairs to perform their work to normalization. Next year, Currency cross pairs will deviate. It takes approximately 1 to 2 quarters to deviate and 1 full quarter to normalize. Best and easiest money trades will last generally 1 quarter and many trades will exist.

GBP and EUR always deviate most against NZD’s and AUD‘s small deviations.

GBPUSD is easiest to measure 1500 pips against its 1.3600 long term target, Taken from its perfect opposite USDCAD 1.3200’s Vs GBPUSD 1.2100’s, an 1100 deviation. USDCAD‘s 1.2800’s target or 400 pips Vs 1100 -1500 GBPUSD informs higher GBP contains a long way and is the pair to trade due to its wide deviation. 

A long term target represents the normalization price.

In the GBP category, deviated pairs are as follows GBPUSD 1500, GBPJPY 1800 pips vs 147.00 target, GBPCHF 1300 pips Vs its 1.3200’s target. GBPEUR. Normal yet extremely low prices are GBP/CAD, GBP/NZD and GBPAUD.

Most deviated is GBP/USD and GBP/JPY then GBP/CHF for an average deviation of 1533 pips.

EURUSD is deviated 600 ish pips vs long term 1600’s target.

EUR/JPY is low yet deviated by the same 600 pips to its 124.00’s target.

EURCHF is deviated by 200 ish pips to 1.1200 target.

EUR/CAD sits just fine yet low.

EUR/NZD sits just fine.

EUR/AUD is deviated by 700 pips V long ter, 1.5600’s target.

EUR/GBP is deviated 600 pips to its 0.8500 target.

Most deviated is EUR/USD, EUR/JPY, EUR/AUD and EUR/GBP for an average deviation of 525 pips.

NZD

NZD/USD is deviated 300 pips to its 0.6800 target.

NZD/CAD sits just fine.

NZD/JPY is deviated 600 pips from its 75.00 target.

NZD/CHF Not sure, never a good trade to deviations.

AUD.

AUD/USD is deviated  600 pips to its 0.7400 target.

AUD/JPY is deviated 300 pips to its 75.00 target.

AUD/CHF deviated by 500 pips.

AUD/CAD and AUD/NZD not sure.

Most deviated AUD/USD, AUD/JPY and AUD/CHF for an average deviation of 466 pips.

USD

USD/CAD is deviated 400 pips to 1.2800 Target.

CAD/JPY is deviated by 500 pips to its 75.00 target.

CAD/CHF sits fairly fine.

USD/JPY is deviated by 400 pips to its 110.00 target.

CHF/JPY is deviated by 200 pips to its 110.00 target.

Most deviated as a whole are Non USD currency pairs and respective JPY cross pairs.

 

Brian Twomey