“Currency Characteristics: Dollaryen” summarizes the highlights of this study. Having this statistical analysis at your fingertips gives you guidelines for typical trading tendencies, as well as flags for signaling extreme activity.
For example, on Feb. 27, as soon as the dollar-yen was down more than 1.00 points, you would have known that over the past 12 months this pair had never recovered to close up for the day after falling this much below the previous close. In this case, the USD/JPY pair fell more than another 2.00 points before putting in the daily low. Of course, this also underscores the importance of managing risk — the daily range for Feb. 27 was more than three times the average daily range.
As always, this analysis should be performed on a regular basis because a trend can skew the statistics.
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