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...
Bears Take Hold of Cable
Bears take hold of cable in recent sessions. GBP/USD falls sharply. Selling pressure dominates. This creates strong downside momentum. Traders spot short opportunities in the pound against dollar.
Today's reversal in cable has once again taken the pair back to the VPOC (volume point of control) support which sits in the 1.5573 price region. This price area is where cable has been rotating since early July, and despite what appeared to be a decisive break away on Monday when cable touched a high of 1.5803, yesterday's down candle has had the effect of creating a classic two bar reversal. Therefore, no surprise to see the resulting fall in today's trading session where cable has fallen over 200 pips.
Today's price action has not only taken cable below the VPOC for the first time since early August but also seen a break through the 100 ma, and with today's move supported with good volume the next stop for cable...
NZD/USD Rebounds Following PBOC
NZD/USD rebounds following PBOC actions. People's Bank of China stimulus often boosts risk sentiment. This supports commodity currencies like NZD. The rebound shows renewed buying pressure against USD.
Perhaps, not surprisingly, it has been the Aussie and Kiwi which have responded the most to the PBOC (People's Bank of China) move to devalue the yuan, with the AUD/USD completely erasing last Friday's and Monday's gains to end yesterday's trading session just over the key 0.73 level. Further falls overnight has seen the pair tumble to 0.7224 since when it has staged a remarkable comeback in the London session to trade (at time of writing) at 0.7330. The move off the session lows has also co-incided with our last VPOC supoort line on both the daily and weekly charts. On the daily chart the first target for AUD/USD is the VPOC resistance at 0.7395, followed by further resistance at 0.7438, and yesterday's high.
However, the extent of the comeback for...
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...
USD/CAD Now Testing Key VPOC Level
USD/CAD is now testing a key Volume Point of Control (VPOC) level. VPOC marks the price with highest traded volume. It acts as strong support or resistance. Price often reacts here with bounces or breaks.
Once GBP data is out of the way we can then look forward to the unemployment claims in the US and the Ivey PMI from Canada. Both items are released at the same time & here expect to see the biggest reaction in the USD/CAD. On the daily chart for the pair the resistance in the 1.2470 - 1.25 region (which also coincides with the VPOC), is putting a temporary brake on any move higher. On our daily currency strength indicator, we do appear to have more downside for the CAD, particularly against the euro, where we recently had a strong move away from the resistance in the 1.38 region.
As always the Canadian dollar will also reflect price trends for oil,...
Aussie Dollar Now in Sharp Focus Ahead of Trade Balance
The Aussie dollar is now in sharp focus ahead of Trade Balance data. This release measures exports vs imports. Strong figures boost AUD. Weak ones pressure it. Traders watch closely for commodity currency clues.
If you come along to our forex webinars you will always hear David & I explain the importance of the fundamental news & how easy it is to be ambushed by 'events'. But I must admit so far it's been absolutely relentless & it's only Wednesday! Coming up we have Aussie retail sales & Trade Balance - both very important numbers, and so far it's been a buy of the Aussie except against the euro - a trade we've been following. Of the two releases - the Trade Balance number has been negative since July last year, and whilst February's number was encouraging, coming in at -0.44b against a forecast of -0.85b, the subsequent releases have been dire.
Tonight's...
EUR/USD Turns Bearish Moving Through the VPOC
EUR/USD turns bearish moving through the VPOC. This key level acted as support. Price broke lower with conviction. Volume price analysis (VPA) confirmed the shift to downside momentum.
The EUR/USD continues to look bearish as it sits on support between 1.0885 & 1.0890 & just below the VPOC the yellow line on the volume point of control indicator. This level has now been breached on good volume and should take the pair to 1.0863. In addition the trend monitor has also transitioned from blue to red and with the US unemployment data coming up shortly, this could provide further downwards momentum if the numbers are on target or better than expected.
The forecast this time around is 271k against a previous of 274k and whilst this is an important number it is the backwash from Janet Yellen's US dollar positive comments which continue to drive the US dollar higher, coupled as always with ongoing concerns over the...
An Interesting Week For GBP
It was an interesting week for the British pound and, in particular, against the US dollar, with the pair selling off sharply on Friday and closing with a wide spread down candle on the daily chart. The move lower was in stark contrast to the recent trend for Cable, which had been firmly bullish, rising in tandem with the EUR/USD as US dollar weakness prevailed on the dollar index. The move on Friday came as no surprise to those traders using a currency strength indicator, with the British pound moving into a deeply overbought region on the indicator, while the US dollar was equally oversold in the slower timeframes.
With Thursday's election now on the horizon, and with a slew of opinion polls due for release in the next few days, these are continually signalling a close result with no party likely to have an overall majority in Parliament. As a result, we can expect to see...
Cable Continues to Build Bullish Momentum
Cable (GBP/USD) continues to build bullish momentum. Buying pressure grows steadily. Price pushes higher on consistent volume. This signals sustained demand for the pound against the dollar.
For forex traders in London yesterday morning, eurozone PMI and UK retail sales were the main items of fundamental news. And it was Cable again which provided us with some important trading lessons.
The first was how we need to be aware of positioning ahead of any major news release. In the run up to the retail sales number, Cable had been basing around the 1.4920 support platform, having come off the 1.4975 high of the previous evening, thereby creating the start of what looked to be a down candle.
However, as always is it the daily chart which is so important, providing us with a more macro view of any currency pair, and here Cable has been very bullish since bouncing off major support in the 1.4898 region.
Just Ahead
Just ahead...
In the run up to any UK news the British pound is often one of the best currencies to consider early in the London trading session, either to position ahead of the news, or to wait until the data has been released. However, this morning the most compelling currency has been the Japanese Yen which is very over stretched across a number of time frames on our currency strength indicator. The result has been a number of potential trades to sell the YEN.
This is the principle way we approach the forex market - focus on a single currency & consider its price behaviour against its counter parties to see which is offering the best opportunity to trade safely and profitably. A sell on the YEN usually denotes positive market sentiment and this morning we have seen some mildly bullish moves in Globex on the NQ & ES indices, confirming this risk on sentiment. The USD/JPY is also ticking higher, giving us additional confidence.
Of...
