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 can expect a strong move into safe havens such as the US dollar and gold. However, as has been the case recently where we have seen a breakdown of correlations and traditional market relationships, the USD did not react as many would have expected.
A look across the daily charts of our 7 major pairs not only reveals this divergence, but also highlights the importance of understanding volatility, particularly with respect to its affect on the ATR of an instrument.
As we can see from the charts only three pairs escaped triggering a volatility candle, and these were the USD/CAD, the USD/CHF and Cable with the USD rising strongly in the first two pairs, but falling in Cable.
Remaining Pairs
Of the remaining four pairs of our majors matrix, where the volatility indicator was triggered, whilst we had strong gains for the USD against the Aussie and Kiwi, the USD fell heavily against the euro and the Japanese Yen. Of course, the USD/JPY was simply reacting to the heavy falls in equity markets, and the fall in the commodity dollars was only to be expected given their exposure to China.
Volatility Indicator
The advantage of having such a volatility indicator trigger is that it can signal what we can expect from subsequent price action. For example in the eurodollar where in yesterday’s trading session the pair traded in a 345 pip range, it is no surprise to see price action retreat back into the spread of yesterday’s dramatic move, and indeed eurodollar has moved substantially lower as the pair approaches a very strong region of support in the 1.1460 region where the 200 ma also awaits.
Moves in the USD/JPY were even more epic as the pair crashed from 122 down to 116 before a combination of VPOC and price action support halted the slide, plus a move higher in the indices saw the pair close the session at 118.42, and all accompanied with strong volume. Again it is no surprise to see USD/JPY remain within the spread of yesterday’s price action, as well as move higher on the back of a reversal in fortune for equities. What is particularly interesting for USD/JPY is today’s move has taken the pair back to test the volume point of control in the 119 region at time of writing.
What We Mean by Currency Majors in Forex Trading
In forex trading, “currency majors” refer to the most traded and liquid currency pairs. They involve the US dollar (USD) paired with other strong currencies. These pairs dominate global volume—over 80% of daily turnover. Traders focus on majors for tight spreads, high liquidity, and reliable signals.
The Seven Major Pairs
The majors are:
- EUR/USD (Eurodollar): Most traded pair. Reacts to ECB/Fed policy.
- GBP/USD (Cable): Volatile on UK data/BoE.
- USD/JPY: Yen safe-haven flows and carry trades.
- USD/CHF: Swiss franc stability vs USD.
- USD/CAD: Oil-linked CAD.
- AUD/USD: Commodity-driven Aussie.
- NZD/USD: Kiwi, similar to AUD.
These involve eight currencies: USD, EUR, GBP, JPY, CHF, CAD, AUD, NZD.
Why Majors Matter
Majors offer:
- Liquidity: Fast execution, minimal slippage.
- Tight Spreads: Low trading costs.
- Reliable Volume: Centralized-like data for volume price analysis (VPA)—high volume moves show conviction.
- Clear Sentiment: Reflect global risk, growth, or safety.
Minors (no USD, e.g., EUR/GBP) and exotics have wider spreads, lower volume—less suitable for beginners.
Trading Majors with VPA and Quantum Tools
Volume price analysis (VPA) shines on majors. High volume on moves confirms strength. Quantum currency strength indicator ranks them live. Matrix shows relational extremes. Focus on majors for disciplined trading.
Start with majors for consistent results. Quantum tools on MT5 or NinjaTrader make analysis reliable. VPA reveals intent—trade conviction, not noise.
Master the majors first. They form the foundation of forex success.
By Anna Coulling