Many traders prefer to work with cross rates, which are characterized by higher volatility and offer the opportunity to make more substantial profits, but losses in case of an unsuccessful operation are also considerable. The most popular strategy for trading cross rates is the Wolf Waves trading strategy, and to trade it, of course, you need to study the basics of Wolf Waves.
Cross rates such as EUR/GBP and EUR/CHF are considered quite difficult to trade, due to the complexity of interpreting and understanding the influence of economic indicators from Switzerland, the entire Eurozone, and the UK on currency price changes. Therefore, experienced traders do not recommend starting with these currency pairs, as this cannot ensure safe Forex and may lead to significant losses. It is also not advisable to start with exotic pairs like AUD/NZD and AUD/CAD, as they are difficult to understand in terms of the driving forces behind price changes.
It is very important to track yen crosses – this will allow you to make an accurate Forex forecast for the major currency pairs. It often happens that movements in these cross rates are leading and act as harbingers of price movements in the major currency pairs. Often, the GBP/USD rate follows the GBP/JPY rate both during price increases and declines. To determine synchronization and identify leading pairs, you can observe the simultaneous movement of prices in adjacent open windows or perform a graphical analysis with chart overlay using an indicator.
With certain skills and the ability to identify patterns, a trader can detect early trading signals on crosses and anticipate them for major currency pairs, making profitable deals. As for the EUR/USD pair, its movement is determined and predicted by strong movements in the EUR/JPY pair, especially when the EUR/JPY chart shows a breakout of significant technical levels on larger timeframes. Most often, this becomes a signal for a reversal of the EUR/USD pair.
Each cross-currency pair has its own features and characteristics, a certain dependence on political events, economic news, and its own interest rate, which drives the movements of the currency pair. Therefore, when choosing a profitable Forex strategy and determining a trading style, all of this must be taken into account.
_