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.
What Is the Commodity That China Needs Most from Australia?
China’s rapid industrialization and infrastructure growth make it the world’s largest commodity importer. One commodity stands above all in its imports from Australia: iron ore. This mineral is essential for steel production—China’s backbone industry. Australia supplies ~60-70% of China’s iron ore needs. This dependency creates a powerful economic link.
Why Iron Ore Dominates
China consumes over 1 billion tonnes of iron ore annually. Most goes to steel for construction, manufacturing, and infrastructure. Australia’s Pilbara region provides high-grade, low-cost ore. Proximity reduces shipping costs. Even trade tensions haven’t disrupted this flow significantly.
Strong Chinese demand lifts iron ore prices. This boosts Australia’s export revenues. The Australian dollar (AUD) strengthens. Weak demand pressures prices lower—AUD weakens.
Impact on AUD and Trading
Iron ore drives AUD volatility. High prices = bullish AUD bias. Low prices = bearish. Volume price analysis (VPA) confirms—high volume AUD rallies during iron ore surges show conviction. Low volume extremes warn of reversals.
Quantum currency strength indicator ranks AUD live on China/commodity news. Matrix shows relational flows.
Other Key Commodities
While iron ore leads, others matter:
- Coal and LNG (energy).
- Gold and copper (metals).
But iron ore’s scale makes it the primary driver.
China’s iron ore need from Australia is unmatched. This link creates predictable AUD setups. VPA with Quantum tools turns it into disciplined trades.
Where Should I Start as a Forex Trader on AUD/USD – In Spot or Futures?
AUD/USD is a popular commodity-linked pair. It offers volatility from oil, mining, and risk sentiment. Beginners often ask: Start with spot forex or futures? The answer depends on experience and risk tolerance. But for most new traders, spot AUD/USD is the better starting point.
Spot AUD/USD: Ideal for Beginners
Spot trading is direct forex—no futures contracts.
- Advantages:
- Low entry barriers: Micro lots (1,000 units) allow tiny positions.
- Tight spreads: Often 0.5-1 pip on majors.
- Flexible sizing: Scale risk precisely (e.g., risk $10/trade).
- 24/5 access: No expiration worries.
- Reliable tick volume for volume price analysis (VPA).
- Best For: Learning VPA—high volume moves confirm conviction. Quantum currency strength indicator ranks AUD live.
Start here to master entries, stops, and psychology without large contract risk.
AUD Futures (/6A): For Experienced Traders
AUD futures trade on CME. Standard contract 100,000 AUD.
- Advantages:
- Centralized volume: Perfect VPA data.
- Leverage with defined ticks.
- Micro version available (lower risk).
- Disadvantages for Beginners:
- Larger size: Higher margins (~$1,000+ day trading).
- Expiration/rollover management.
- Wider swings—losses amplify fast.
Move to futures after spot mastery.
Recommendation
Start with spot AUD/USD. Practice on demo. Use VPA—high volume on moves validates entries. Quantum tools on MT5 enhance relational insight. Build discipline first. Transition to futures for precision later.
Spot offers safer learning. VPA works beautifully on both. Quantum indicators deliver the edge regardless.
Begin with spot AUD/USD. Master the basics—grow confidently.
By Anna Coulling