As spot forex traders we sometimes forget the futures market can often help with market sentiment towards a currency and the daily chart for 6A, which is the contract for the Aussie dollar is particularly revealing.
For the 6A, it has been a return to business as usual over the last couple of weeks, since the breakaway from the VPOC at 0.7320 once again confirming the heavily bearish sentiment for the AUD.
The initial break was on the 24th August where the wide spread down candle also triggered the volatility indicator, and as expected the price action moved back within the spread of the candle; a cynical move designed to trigger stops.
Since then the candle has duly been confirmed with a rapid move through the low volume node on the VPOC indicator at 0.6980 with the pair now trading lower once again at 0.6934 in the London session.
With the weight of transacted volume now sitting overhead in the 0.7320 price area and around the volume point of control, this is adding additional pressure to the move lower. Pressure to the downside is also gaining momentum following Friday’s price action on high volume and further reinforced by Thursday’s pivot high.
The currency strength indicator to the left of the chart is also confirming this bearish picture for the pair, with the AUD moving firmly lower back towards the oversold region on the indicator, and the US dollar rising strongly and back towards the overbought region.