NZD and USD in Focus on the Currency Strength Indicator
Thanks to everyone for coming along to our forex webinar for the London session earlier, where our focus was the euro & eurodollar, particularly with some pretty heavy option expiry strike prices due up later today. Also in view was the kiwi which was in a similar state to the British pound ahead of Chancellor Osborne's autumn statement. In other words totally beaten down across multiple time frames, and despite various efforts to rise kept falling back into oversold territory. Interesting to see the Kiwi (white line) has now moved off the floor on the 30 & 60 min CSI.
Also note the USD (the red line) is very overbought, so we need to keep an eye on what it is likely to do the remainder of the day. What happens in our next webinar for the US session is difficult to tell given it was Thanksgiving yesterday, and today is Black Friday. Appreciate it's...
This morning's highlight comes from Chancellor George Osborne here in the UK with his Autumn Forecast Statement, so expect lots of smoke & mirrors, volatility and opportunity to shake traders out of the market.For the British pound complex on the faster time frames, it's been a case of some good moves lower against USD, JPY & euro. The hourly currency strength indicator is also highlighting the GBP as heavily oversold, but as we have said many times in our forex webinars - currencies, markets and instrument can stay stubbornly over extended much longer than we think. And as we also say in the webinars your time horizon will always be a factor in any trading decision, and also help to quantify the level of risk associated with that trade.
Discover more about the currency strength indicator here....
Majors Wait for the FED
Major currency pairs often pause ahead of FED decisions. Uncertainty creates consolidation. Traders wait for clues on rates or policy. This builds tension. Volatility follows the release. Volume price analysis (VPA) helps navigate the wait.
Ahead of today's release of the FOMC minutes it has been the commodity dollars that have reacted most strongly to a stronger USD, whilst eurodollar and cable have been contained to a very narrow trading range. It will be interesting to see whether these two laggards will play catch-up once the minutes hit the news wires.
USD/JPY too has been contained, with the pair cautiously approaching the 124 price point, but finding the 123.60 price level so far difficult to breach. For USD/JPY, it will be a reaction in equities that determines whether we see further upward momentum in this pair, as the market waits for clues on the FED's interest rate intentions.
Why Majors Consolidate Pre-FED
FED announcements drive USD strength. Hawkish tone (hikes)...
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Despite finding support at 1.0996 following last week's mauling eurodollar is struggling to hold onto the weak overnight gains. 15 min chart for the pair is particuarly revealing with a series of volatility candles triggered as the combination of the resistance at 1.1056 and the 100ma have been taken by traders as an excuse to sell.
Other euro pairs also taking a tumble include the EUR/GBP and EUR/CAD, the former sitting neatly on the VPOC on the 15 min timeframe which sits at the 0.7180 region, and any move through here could see the pair test support at 0.7168. Any move lower for the EUR/GBP cross is also benefiting from a move higher in cable.
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Aussie Finding Some Bullish Momentum
The Aussie is finding some bullish momentum recently. AUD pairs push higher. This reflects renewed buying interest. Commodity links and risk sentiment support the move. Traders spot opportunities in AUD crosses.
Of the three commodity dollars, namely the Aussie, Kiwi and Loonie it is perhaps the Aussie which finally appears to be showing signs of a potential reversal from its oversold state on the slower time frames of our currency strength indicatort (the blue line). And of the Aussie pairs it is perhaps the AUD/USD and AUD/CAD which appear the most interesting.
Starting With AUD/USD
Starting with the AUD/USD it was the failure in May to break through the resistance at 0.8160 which was the start of the its downards descent which saw the pair finally find some support at 0.6906 on the Friday before the Labor Day Holiday in the US. And whilst this level was tested once again last Monday, since then the AUD/USD has managed to...
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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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...
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...
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...
