By Sean Hyman As I told you yesterday, I don’t subscribe to the pure technical trading Forex philosophy. On the contrary, I always look at a currency’s fundamentals first, so I know which currency pairs are best to “technically trade.” It’s the easiest way I know how to weed out the best five or six pairs to trade out of the 30 or so possibilities.

So if you missed yesterday’s article, I’d encourage you to check it out here so that you’ll know how I weed 30+ currency pairs down to the top 3-5 best pairs.

Right now, you know we weeded down the list to AUD/USD, AUD/JPY, NZD/USD and NZD/JPY based off of the best fundamentals vs. the worst fundamentals.

Now to know when exactly to buy, it helps to check out these pairs’ charts. Remember, Australia ranked the highest on my fundamental list and New Zealand made a good “stand in” if Australia didn’t look like a good trade from a technical standpoint.

So I’d look to AUD/JPY and AUD/USD first. If those look good on the charts, then I’ll trade them. Case closed.

Therefore let’s take a look at these two, below.

Compare to See Which Is a “Better Buy”

Since these are both fundamentally sound pairs, I need to ascertain which one is the “safest” technical buy right now.

How I Weed Out the Unwanted Charts…

When I compare their hourly, 30- day charts to each other I can readily see that AUD/USD is near its accelerated uptrend line but AUD/JPY is still far off from its accelerated uptrend lines.

Also, AUD/JPY just got a MACD sell signal while AUD/USD is far past its MACD sell signal and much closer to its next buy signal than AUD/JPY.

Therefore, I’d be a buyer of AUD/USD firstly and wait on AUD/JPY to produce its next buy signal later on before investing in it.

The AUD/USD chart also is much closer to a stochastic buy signal than is the AUD/JPY pair at this point too. (A stochastic buy signal indicates that the pair is ready to buy. You can see this on the chart, when the lines go down to the 20 level or below and cross and then come back up above the 20 level.)

Even the price action looks better on AUD/USD vs. AUD/JPY. For instance, the AUD/USD has spent more time heading higher and less time in a sideways consolidation than AUD/JPY. In other words, AUD/USD has been in a cleaner, more obvious uptrend.

So as you can see, there’s even ways to rank which pairs to buy and sell based on a technical stand point as well.

This is how I’m able to take a list of 30+ pairs down to a handful of pairs and then know which one may have the best odds of moving in a sustained direction.

Therefore, at the time of this writing, I’d rank AUD/USD as my first buy and AUD/JPY as my runner up. Then afterwards, if I wanted more diversification, I’d look to NZD/USD and NZD/JPY and do the same “technical comparison” with them.

In the end, it’s all about odds and how well you play them. I hit it from both the fundamental advantage AND the technical advantage. Then on top of that, I look for ways to cut down my risk factors on each trade, so I can choose consistent winners. Then I make sure I manage my risk in the trade properly by risking only a small percentage of my capital on the trade…and that’s what gives me an edge and success over time.

I hope this has helped you to crawl into my mind to see how I pick trades. There are many ways to trade Forex, but this is the easiest way I know. You may find that it helps you in your trading too.

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