We must build a STORY of every pair (thats what a mentor told me). I recently understood the significance of this concept.
Here is an example of my story about the NZDJPY pair:
1) After a sharp decline mainly due to end of yen , the RBA announces cut rate 2015-02-02. The NZD gains strength and becomes the most yielding currency.
2) Necessary technical rebound after a strong rally near 90.000. Price tends to react to round numbers
3) Price regain confidence and break important level 90.000. Many traders thought it would rally higher.
4) FEAR: rumors that RBNZ could cut rates also. The NZD loses power very quickly against all currencies.
5) 2015-03-11 The RBNZ announce no cut rates, the NZD rallies again. After that the market becomes sideways waiting for the FOMC announcement.
6) 2015-03-18 After the FOMC announcement the market has clear direction. The NZD gain confidence again and breaks the level 90.00 easily to reach new highs. Unless something drammatically happens i think the targets shown at the chart are reachable.
This post shows us the importance of building a story of every pair. Its not just a matter of using indicators and trading systems mechanically (they are secondary). Building a story will make us better traders.