In the market, some currency pairs perform better than others during the first week of April, and some currencies appear to breakout at a greater amount than others do. This is a sign that a certain currency pair is “going short” which is what we mean when we talk about selling short.
Shorting currencies can be done in two ways. Either you can hold them long, which means that you will never hold them for any length of time because they are valued too high, or you can hold them short, which means that you will hold them for a shorter length of time than you would hold them long. If the currencies you short sell perform poorly, then you will be in the positive (moving up) position before the currency pair breaks out to a higher price, giving you more profits than if you had held it longer.
If you wish to short both currencies, you will need to choose which one to short. One way to choose which currency pair to short is to choose pairs that you know are going to breakout before the Apr. High.
The second way to short currencies is to choose pairs that are undervalued and to look at the number of days they have been undervalued. If a pair is too overvalued or too undervalued, you will want to sell short immediately and short it to its closing price.
To determine whether a pair is overvalued or undervalued, look at the charts of that pair. When the price of the currency has not yet broken out above the High Point on the chart, it is undervalued, and when the price has already breached the High Point, it is overvalued.
Another indicator to use is the current position of the pair. If the pair is priced below the High Point and is still moving in the same direction, it is undervalued. Conversely, if the pair is priced above the High Point and is now moving against the direction of the High Point, it is overvalued.
The average position of the pair will be influenced by the nature of the pair. When a pair is long, it is expensive because it is valued too high, and when a pair is short, it is cheap because it is valued too low.
To determine which pair is overvalued or undervalued, take a look at the charts. The charts are an excellent way to determine whether a pair is undervalued or overvalued.
If a pair is priced lower than the High Point and is moving in the same direction, it is undervalued, and if the pair is priced higher than the High Point and is moving against the direction of the High Point, it is overvalued. This is a simple method that anyone can use to determine which pair is going to breakout to a higher price.
Another way to determine whether a pair is going to breakout to a higher price on a breakout day is to see which pair has traded above the opening price and if it trades below the opening price on subsequent days. By looking at the charts, you can determine which pair has performed poorly and to where.
By watching which pair has performed well on a breakout day and after a while, you can determine which pair will breakout on the next breakout day. If you find a pair that has performed well on one breakout day, and it has continued to break through a price level on subsequent days, you can then short it to its nearest trading price.
This pair will likely continue to break through that price level before the Apr. High, and by then, you will have increased your profits by shorting it even more.