While there are many currency pairs worth buying and selling in the foreign exchange markets, many pairs worth watching fly under the radar of retail traders, particularly minor pairs. The EdgeFinder, an A1 Trading tool for traders aiming to holistically bolster their analysis skills, is helpful for identifying such opportunities for trade setups. Today we will look at which three pairs the EdgeFinder currently evaluates as most worth selling, and why. We will employ fundamental, technical, and sentiment analysis as we explore 3 pairs worth selling now.
In terms of fundamentals, CAD has a narrow, but important, lead over GBP. While the UK has an unemployment rate 1.5% lower than Canada’s, the Bank of England has been slower to respond to their inflation threat than the Bank of Canada, lagging 0.5% behind regarding benchmark interest rates. Q1 GDP growth in both countries has been identical, percentagewise. In terms of technical analysis, we have seen a steep downtrend for over three months, plummeting from nearly 1.74 to 1.58, with 1.58 being a historic support zone. Considering the seasonality bias in CAD’s favor (historically performing well this month), we may well see a breakout to the downside, followed by a retest of 1.58 as resistance and continued bearish momentum. Regarding sentiment analysis, double the percentage of institutional traders long on GBP are long on CAD, and retail traders are strongly bullish on the pair, both bearish signals. Thus, this pair has earned a -6 rating from the EdgeFinder, a strong sell signal.
Regarding fundamentals, NZD is far ahead of GBP. New Zealand has an unemployment rate 0.5% lower than the UK’s, and the Bank of England has been far slower to respond to their inflation threat than New Zealand’s Reserve Bank, leaving their benchmark interest rate a full 1% lower. New Zealand’s Q1 GDP growth was a whopping 2.2% greater than the UK’s as well. In terms of technical analysis, we are seeing a retest of resistance in the form of a steep downtrend since February 2022, with higher lows being formed as well. Considering the seasonality bias in NZD’s favor, we may well see a bearish continuation, making this retest a potential selling opportunity. In terms of sentiment analysis, retail traders are fairly divided on the pair, while institutional traders are similarly shorting both currencies, offering little information on the pair. Taken altogether, GBP/NZD has earned a -7 rating from the EdgeFinder, a strong sell signal.
Regarding fundamentals, CAD is far sturdier than EUR. Canada’s unemployment rate is 1.6% lower than in the Euro Area, and the Bank of Canada has been far more aggressive than the European Central Bank regarding rate hikes, with their benchmark interest rate currently 1.5% higher. (This may change as the ECB is contemplating a more hawkish rate hike strategy.) Canada’s Q1 GDP growth was approximately 0.5% greater than the Euro Area’s as well. In terms of technical analysis, there has been a strong downtrend since summer of 2020, with the 1.34 support level recently being retested rapidly. Although seasonality bias weighs in EUR’s favor, the pair appears ripe for a breakout to the downside. In terms of sentiment analysis, institutional traders are somewhat divided on the pair, while retail traders are bullish, a bearish signal. Taken altogether, this pair has earned a -6 rating from the EdgeFinder, a strong sell signal.
The EdgeFinder is a handy supplemental tool for any trading strategy, as it aggregates data for fundamental, technical, and sentiment analysis to generate nuanced reports.
Three minor pairs that have earned a ‘strong sell’ signal from the EdgeFinder, for various reasons, are: GBP/CAD, GBP/NZD, and EUR/CAD.
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