Kiwi roaring higher on the currency strength indicator

Good to see the Kiwi on a bit of tear (the white line on the currency strength indicator), but comes as no surprise given how oversold it was at the end of last week. We've been tracking the NZD/USD which has had a huge move higher overnight & broken through the VPOC on the daily chart and is now touching the 100 ma. As we mentioned in yesterday's webinar although December price action can often seem erratic, it can nonetheless offer some great trading opportunities. And those of you who come along regularly to our webinars will know David & I are great fans of both the Kiwi and Aussie! You can register for the trading webinars here. The hourly currency strength indicator is showing some great potential set ups. Have a great trading day....
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Euro tumbles on Draghi comments

Mario Draghi's comments at the ECB conference regarding further stimulus has led to a dramatic fall in the euro across the board, and the eurodollar in particular. This weakness, however, was first signaled last week, and has been developing since the start of the trading week, and is a follow through from the two bar reversal posted on the daily chart. Today's price action on the eurodollar daily chart has resulted in a volatility candle being triggered given the extreme move, and if there is no follow through, then it should be surprise to see the price action simply retreat to within the spread of today's candle. In addition today's price move has seen the eurodollar move back through the volume point of control. ...
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Eurodollar continues to frustrate

Eurodollar continues to frustrate traders, and it's easy to see why. Since the failure to breach 1.1713 the pair has retreated back into the range of the VPOC (volume point of control) in the 1.1170 region where it continues to remain waterlogged. With end of month and end of quarter position squaring we will have to wait to see whether eurodollar can finally break away from this region. From a technical perspective the heavy selling of 6 weeks ago is self evident with the extreme volume and deep upper wick to the candle telling their own story. Since then the pivots have helped to define the floor and ceiling of the congestion zone, and with volume now building on the VPOC histogram any move away is likely to be extreme and accompanied with strong participation. The key level to any move to the downside is 1.1128 where strong support awaits.  ...
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Cable finally finds some support (& buyers!)

Following longest fall since 2008 no surprise to see British pound and the 6B move higher in this morning's trading, on the back of profit taking and closure of US and Canadian markets for the Labor Day holiday. From a VPA (volume price analysis) perspective the recent move lower has also been associated with falling volume suggesting the downwards pressure is, for now, running out of steam, with the platform of support at 1.5160 providing the reason for the pullback. Longer term, however, the outlook remains bearish for Cable, and should the 1.5160 price point fall to hold we may see a move towards 1.50 and even a possible re-test of the 1.46 region in due course.  ...
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Aussie dollar continues lower

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...
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Bearish sentiment continues for eurodollar

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...
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Interesting divergence in the majors

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. 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...
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Eurodollar bears take control

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. 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 price region. Friday's close below the 100 ma appears to have been the catalyst for a pick up in bearish sentiment for eurodollar which saw the pair close yesterday's trading...
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And now we wait for the forex market to open!

Have been reading that carnage is expected and word is EUR/USD has already dropped to 1.1029 - although my MT4 hasn't started as yet, so we will have to wait & see. Meantime here are some levels for some of the euro pairs : EUR/USD - was already bearish & shorts at CFTC increased last week. Putting the 1.1029 aside for the time being - 1.1052 is the first level of support & if breached 1.0819 comes into play where a high volume node on the VPOC awaits. EUR/JPY - Has been in congestion for a number of days having failed to breach the 140.78 price point & now looking to turn bearish. The immediate level below is at 137.57 with any move through here then likely to test the 136.69 region. The VPOC continues to remain in the 134.94 region for the time being and should this be taken out then a longer term bearish trend will ensue. EUR/AUD - The interest rate...
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Forget the euro, look at the British pound!

In all the brouhaha about Greece and the euro it's easy to forget what else is going on in the forex market. Sometimes I feel Greece is taking up too much space in traders' heads at the expense of other markets and currencies. And for a perfect example of what I mean look no further than the continued strength in GBP which has seen some great trends in GBP/NZD & GBP/CAD & I'm still waiting for the GBP/JPY to turn lower, but only once we see a major reversal in risk sentiment. On both charts the NinjaTrader trend monitor has remained firmly bullish with only a minor transition on the GBP/CAD reflecting the recent pause in the longer term trend. However, moving to the NinjaTrader currency strength indicator to the left of the chart, here we can see that the British Pound, the yellow line, is now moving ever deeper into the oversold region on the daily timeframe, so this trend...
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