The currency array and universal sentiment explained

Once of the key concepts to understand as a forex trader is that of sentiment to a currency, and whether that sentiment is universal across the complex. In this video we explain the principles of the Quantum currency array and in particular using the yen complex. Here we can see we have diversity on the yen, with some pairs rising and some falling, so sentiment to the yen is currently mixed with both buying and selling in this time frame.

However, when we move to consider the British pound which is the most bearish in the yen complex, here we can see why. The GBP is being universally sold across the complex, and as such with any trading opportunities, offers a lower risk proposition as we are trading with the market universally. In other words everyone is selling the GBP, so we are simply joining the current sentiment which is across the GBP complex and so the risk is lower. There is nothing wrong with trading against the universal flow, in other words counter trend trading, but this carries a higher risk as we are trading in one direction, whilst the remainder of the market is trading in the opposite direction. This is fine, as long as we understand the risks, and more importantly understand this is what we are doing. Many forex traders don’t as they only ever consider the one chart associated with their chosen pair.

How to isolate and focus on your currency pair on MT5

In this video we explain how to isolate out the currency pair using the currency strength indicator, and then to add further focus to the chart by including the currency index in our trading work-space.

In this example it’s the GBP/JPY which is our focus, and on the currency strength indicator all the other currencies have been turned off, allowing us to see instantly and clearly where the two currencies are in their journey. This can be done easily and quickly using the toggle buttons on the indicator.

Here we can see the Yen is rising strongly and the British pound is falling strongly and so developing the strongly bearish trend we see on the chart. In other words the perfect combination, where we have strength in one currency reinforced with weakness in the other. This is confirmed by the trend monitor indicator, the support and resistance indicator and of course volume.

Finally to help focus further on this pair, we have added the yen index, which offers another view of the Japanese yen, but this time on a chart, and so helping to provide a further view of the currency we are focused on in our trading position.


The three indices we often forget as forex traders!

In this video we explain the importance of understanding where the three major currencies are heading, whether intraday or on a longer term basis.

The three main currencies are of course the US dollar, the Japanese yen and the single currency of the euro. The Quantum Trading suite of tools and indicators delivers an index for all three, and using the tab feature of NinjaTrader 8 offers a compact and efficient way to monitor these key currencies in all timeframes, whilst optimising space on the screen. This allows you as a forex trader to track these currencies, and from there have a much clearer view of where each is heading which will then be reflected in the major currency complex or the cross currency complex accordingly.

The US dollar, the Japanese yen and the euro are three currencies which drive the forex market universally, and having this clear view is paramount to then understanding where the currency pairs themselves are heading individually.

Volatility indicator detects and protects

A great example of the Quantum volatility indicator in action yesterday in the eur/aud currency pair. The indicator was triggered on unexpected comments from ECB member Nowotny – noted hawk – who suggested the ECB’s current program of QE was likely to come to an end sooner rather than later. Ahead of these comments eur/aud was looking to continue its bearish tone.

However, on the comments hitting the newswires sentiment in the euro changed and euro pairs soared as volatility hit the market. This indicator triggers in real time so, as traders, we know instantly something is afoot.

What then generally happens is that on completion of the volatility candle, price action retraces to within the spread of the candle as the sting is taken out of the move. But the subsequent candle is also interesting as it is hanging man on high volume, which is almost always a precursor to a reversal in trend and sentiment. And this is exactly what happened as the ECB took the unusual step of rebutting Nowotny’s remarks.

How the MT5 currency matrix reveals market sentiment

In this video which comes towards the end of the London session and the start of the US session, we highlight how the currency matrix helps to identify the universal sentiment to the Canadian dollar. In this example the USD dollar has been strongly bullish before reversing to bearish and coupled with very strong buying of the Canadian dollar which is shown on the currency strength indicator.

On the currency matrix we then isolate our the Canadian dollar which confirms that sentiment across the CAD complex is universal. In other words, the CAD is being bought against all other primary currencies and as revealed on the 10 minute ranking ladder with the 20 minute timeframe starting to develop in the same way.

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Using the MT5 CSI currency strength indicator for scalping

In this short video we explain the power of using the Quantum Trading currency strength indicator in multiple timeframes on the MT5 platform. And in this example we are using the MT5 platform once again which provides a much wider choice of timeframes using both the standard and custom options. Here we have the currency strength indicator applied to the 5 minute the 10 minute and the 15 minute timeframes, and focused on the EUR/CAD currency pair.

Here we can see the trend is already underway and confirmed by the currency strength indicator with the euro currency falling strongly and the Canadian dollar rising just as strongly. This is where we see the strongest trends develop and the steepness of the line for each currency gives us clear and strong signals of the strength of the momentum for this pair,  with strength in one and weakness in the other, providing the prefect combination for a strong trend in the pair.

The trend here begins in the fastest timeframe and then develops across into the slower timeframes, and so helps to keep us in the trend to maximise any profit potential. When the currencies cross, then a strong trend is underway, signaling momentum and further development of the trend.

MT5 currency strength indicator in action

In this video we show the Quantum Trading MT5 currency strength indicator in action, and focus in particular on the Japanese yen. This has been the ‘ go to’ currency for the last few weeks as risk on and risk off sentiment has ebbed and flowed intraday, and reflected particularly in the yen cross pairs.

In this example we have the 15 minute chart for the NZD/JPY with the currency strength indicator giving us all the clues and signals for this strong trend higher, with the New Zealand dollar being bought strongly, and the Japanese yen being sold equally strongly. The currency strength indicator is now available for both MT4 and MT5 platforms. You can find all the details by clicking the following link – Currency Strength Indicator MT4/MT5

Heatmap highlights extent of overbought & oversold on Aussie & CAD

At the start of a new month and quarter it’s always useful to consider which currencies and currency pairs are at extremes, because if there is one thing we can be sure of is that at some point sentiment for an individual currency and currency pair will change. And this is where the Quantum heatmap indicator can help as it not only ranks our 28 currency pairs, but also does so across multiple time frames giving us a snapshot of what is happening on 252 charts.

And as we can see it is Aussie and Cad that have been heavily sold, particularly against the Yen and the British pound. The daily chart of the aud/jpy now shows the pair attempting to base in the 80.50 region, which also coincides with our S3 Camarilla level, and today’s bullish price action, on reasonable volume, has taken the pair to the underside of the first major resistance at 82, and assuming risk off sentiment manages to hold (& Donald stays away from any comments about Amazon) any move through here would see aud/jpy try to regain 82.33 and thereafter 82.74. A failure would see the pair back to test the relatively strong support at 80.85.

By Anna Coulling

Currency array highlights trend & momentum

Identifying trend strength and momentum is not easy, and trading strength and momentum is even more difficult, which is why we developed the Quantum currency array indicator. With this single elegant indicator not only can we see which currency pairs are trending strongly, but also the momentum of this trend, as well as see those pairs that are in congestion. And finally we can quickly identify those pairs that are potentially approaching an overbought or oversold sold.

The MT5 version of the indicator works on both standard and custom time frames, which means we spot signals much earlier, and in addition we have also built into the indicator a bookmark feature which gives us the option to bookmark a currency pair of interest making it easier and quicker to identify on the ranking ladder.

By Anna Coulling

Make volatility your friend

As traders volatility can be your greatest enemy, but with the Quantum volatility indicator you can now not only see it trigger in real time, but also have the confidence to take cool headed trading decision. The indicator works on all time frames and across all markets, and in this video you see on the MT5 platform.

By Anna Coulling