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...
Pause in Cable’s Sharp Move Lower
A pause in cable’s sharp move lower offers breathing room. GBP/USD selling pressure eases temporarily. Price consolidates after the drop. This creates potential setups. Traders watch for continuation or reversal.
Last Tuesday's failure by cable to take out the 1.5818 resistance resulted in a down candle on high volume, which when it was combined with the previous day's bullish candle on very high volume gave us a two bar reversal (aka a shooting star), and the first signal that cable's preceding move away from the volume point of control region was likely to fail. This view was also validated by the volume accompanying the shooting star, and by a further clear signal of weakness to come.
Summary
Against this backdrop Wednesday's sharp 267 pip sell off in cable came as no surprise with the pair also moving firmly below the VPOC to close out at 1.5463 on the session.
The bearish sentiment was cable continued for the remainder of...
The release of slightly better than expected preliminary GDP and unemployment claims for the US did manage to add some bearish momentum to the eurodollar before it found support at 1.2525 from where it has been attempting to rally higher. It goes without saying this level needs to be taken out for the pair to continue lower. However, what is also significant on the 30 min and hourly chart is that this price point marks the low of the volatility candles which were triggered at the time of the news releases.
A trigger of such a candle - in other words a candle which is outside the ATR for the instrument in question - often results in the price action simply retreating within the spread of the candle.
At time of writing the pair is once again approaching the 1.1225 price point and if taken out should see the pair move to test the next level of support at 1.1213.
The good...
Bears Take Hold of Cable
Bears take hold of cable in recent sessions. GBP/USD falls sharply. Selling pressure dominates. This creates strong downside momentum. Traders spot short opportunities in the pound against dollar.
Today's reversal in cable has once again taken the pair back to the VPOC (volume point of control) support which sits in the 1.5573 price region. This price area is where cable has been rotating since early July, and despite what appeared to be a decisive break away on Monday when cable touched a high of 1.5803, yesterday's down candle has had the effect of creating a classic two bar reversal. Therefore, no surprise to see the resulting fall in today's trading session where cable has fallen over 200 pips.
Today's price action has not only taken cable below the VPOC for the first time since early August but also seen a break through the 100 ma, and with today's move supported with good volume the next stop for cable...
Interesting Divergence in the Majors
Interesting divergence in the majors often signals shifts. Currencies move differently despite shared factors. This reveals underlying weakness or strength. Traders watch for potential reversals or continuations. During yesterday's overall market volatility the forex market posted some very interesting and intriguing price action and candle patterns, particularly with regard to the major pairs.
Spotting Divergence with VPA
Volume price analysis (VPA) highlights divergence clearly. One major strengthens on high volume. Another weakens despite similar news. Quantum currency strength indicator ranks them relationally. Matrix shows cross-pair mismatches.
Practical Trading Insights
Divergence warns of changes. For example, USD strong but EUR/USD not falling—euro resilience. Or GBP lagging peers—pound vulnerability. Anna Coulling's VPA approach with Quantum tools spots these early for high-probability setups.
Interesting divergence in majors creates opportunities. Quantum indicators make relational analysis simple and reliable. Stay alert for these subtle but powerful signals.
As a general rule of thumb whenever the market becomes agitated and adopts a 'risk off' mood traders and investors...
Eurodollar Bears Take Control
Eurodollar bears take control in recent sessions. Selling pressure dominates EUR/USD. Price pushes lower with conviction. This signals short-term bearish sentiment. Traders watch for continuation.
Although the market is focused on tomorrow's release of the FOMC minutes, an event guaranteed to cause a degree of market volatility, it is the release of the CPI and Core CPI numbers earlier in the session which are probably even more important. Of the two releases it is the Core CPI the FED pays the most attention to, and a big influence on the likely timing of any rise in interest rates.
Meantime, the USD appears to have found its mojo once again following last week's dramatic fall, with the eurodollar bearing the brunt of this resurgence.
Daily Chart For Eurodollar
The daily chart for the eurodollar is particularly interesting where weakness for the pair started last week with the failure to break and hold above the VPOC (volume point of control) in the 1.1167...
CSI Highlights GBP Sell Off
The Currency Strength Indicator (CSI) highlights GBP sell off clearly. It ranks currencies by relative performance. GBP drops sharply in rankings. This signals heavy selling pressure. Traders see weakness early.
Ahead of the release of the Monetary Policy Minutes from the RBA, and tomorrow's CPI number for the UK, it's been interesting to see how the Aussie and British pound have been behaving in today's trading session. And of the two currencies it has been the British pound which has seen some heavy selling against both the USD and the Aussie.
The hourly chart of the CSI (currency strength indicator) highlighted the extent to which the British pound was overbought, and Cable's failure to take out the resistance at 1.5688 signaled the start of a reversal in fortune for the pair and a move lower of over 100 pips. And it has only been a combination of the VPOC at 1.5585 and support at 1.5578 that has prevented...
USD Looks Set to Move Higher
The USD looks set to move higher in recent sessions. Buying pressure builds steadily. This reflects renewed dollar strength. Traders watch for continuation across majors.
In the current media speculation surrounding the impact of the PBOC decision to revalue/devalue the yuan, particularly on how this may (or may not) affect the FED's decision about raising interest rates, it is easy to forget two things. First, the fundamental news releases which too will add their own layer of volatility, and second Greece, which today is back centre stage as the Greek parliament meets today in emergency session to ratify the latest bail out deal.
Key Releases
Today's key releases are primarily in the US with retail sales, core retail sales and the unemployment claims due. And of these it is the retail sales numbers which the market will be focused on primarily because they may give some guidance as to the FED's thinking about interest rates.
Meantime in this morning's...
NZD/USD Rebounds Following PBOC
NZD/USD rebounds following PBOC actions. People's Bank of China stimulus often boosts risk sentiment. This supports commodity currencies like NZD. The rebound shows renewed buying pressure against USD.
Perhaps, not surprisingly, it has been the Aussie and Kiwi which have responded the most to the PBOC (People's Bank of China) move to devalue the yuan, with the AUD/USD completely erasing last Friday's and Monday's gains to end yesterday's trading session just over the key 0.73 level. Further falls overnight has seen the pair tumble to 0.7224 since when it has staged a remarkable comeback in the London session to trade (at time of writing) at 0.7330. The move off the session lows has also co-incided with our last VPOC supoort line on both the daily and weekly charts. On the daily chart the first target for AUD/USD is the VPOC resistance at 0.7395, followed by further resistance at 0.7438, and yesterday's high.
However, the extent of the comeback for...
The VPOC Indicator for NinjaTrader in Action!
The Volume Point of Control (VPOC) indicator on NinjaTrader is in action across sessions. It marks the price with the highest traded volume. This reveals "fair value" levels. Price often reacts here. Traders use it for support, resistance, or reversals.
In this video we take a closer look at the VPOC indicator for Ninjatrader, and see it in action across a variety of markets and timeframes. We start by looking at the ES mini on fast 3-minute and higher timeframe charts as the physical market opens to join Globex. Next we look at the VPOC on a GBP/USD chart on seconds, and to complete the trio of faster time frame charts, we look at the NQ emini on a tick chart. The VPOC indicator for Ninjatrader works in exactly the same way, whether on a minute chart, a seconds chart or a tick chart.
Finally, to round off this video, we take a look at some...
