https://youtu.be/uqUt3dRh0Xo
In this morning's forex session with Anna and David of Quantum Trading, the session starts with Anna considering some of the fundamental drivers for the British pound, and of course Brexit. Over the next few months we are likely to see increasing volatility as the negotiations reach their conclusion. Whether agreement is reached or not, one thing you can be sure of is that each statement or announcement will send the pound sharply higher or lower across the complex.
The New Zealand dollar was the pair in focus on the NinjaTrader platform bringing together many of the VPA lessons on the faster timeframes, with a decisive move lower signalled across the complex on the currency array and also on the currency strength indicator. One of the key issues for all traders managing the emotional stress created when a market pauses and reverses, in other words from the primary into the secondary trend, before establishing the initial trend once more. Here we...
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....
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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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...
Last Tuesday's failure by cable to take out the 1.5818 resistance resulted in a down candle on high volume, which when it was combined with the previous day's bullish candle on very high volume gave us a two bar reversal (aka a shooting star), and the first signal that cable's preceding move away from the volume point of control region was likely to fail. This view was also validated by the volume which accompanied the shooting star, and a further clear signal of weakness to come.
Against this backdrop Wednesday's sharp 267 pip sell off in cable came as no surprise with the pair also moving firmly below the VPOC to close out at 1.5463 on the session.
The bearish sentiment was cable continued for the remainder of the week, as the pair closed out August 1.5390.
The start of the new trading week saw cable once again come under pressure, on relatively low volume, but this is easily explained as Monday was...
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...
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...
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 Greek debt issues, which have yet to be resolved - if ever!
The currency strength indicator is confirming the negative sentiment for the single currency with the orange line, the euro, reaching an...
Without wishing to downgrade this evening's FOMC minutes, which will no doubt result in the usual volatile market moves, stop hunting & general shenanigans, the main FED event takes places on Friday at 6.00 pm London time. This is when Janet Yellen is due to give an important speech about the US economic outlook, and so one to watch.
Meantime USD strength has continued overnight across the majors and into this morning, with German PPI helping to give the eurodollar a shove lower. Other items of note this morning include the MPC (Monetary Policy Committee) of the BOE playing their standard formation (football parlance) of 0-0-9. In other words 9 defenders, no midfield & no strikers.
For FED watchers FOMC Member Evans has been speaking in Munich and has been simply repeating his call for a delay in raising interest rates. No moves expected as he is re-iterating his well known stance as a dove. This is why we need to know where...
USD buying has continued into US session, and despite it being a holiday in Canada the USD/CAD has done really well. Question now is how far is USD likely to move higher. The key level is 11,750 on the USDX index which is the support platform which was breached last week & of which we may see a re-test.
Focus overnight is back to AUD & NZD, with a monetary policy statement from the RBA for the first, & inflation expectation for the second. Both AUD/USD and NZD/USD have had a bearish day, although Aussie dollar less so. In addition, whilst we can expect a reaction in both these pairs, we can also expect some interesting moves in the AUD/NZD cross which today has had an 80 pip move to the upside.
Since last Tuesday the pair has traded in a relatively narrow range, 1.0865 to the top & 1.0776 to the bottom, and I do believe the overnight news may be...
