We use a range of cookies to give you the best possible browsing experience. By continuing to use this website, you agree to our use of cookies.
You can learn more about our cookie policy here, or by following the link at the bottom of any page on our site.

Free Trading Guides
EUR/USD
Mixed
Low
High
of clients are net long.
of clients are net short.
Long Short

Note: Low and High figures are for the trading day.

Data provided by
GBP/USD
Mixed
USD/JPY
Bearish
Low
High
of clients are net long.
of clients are net short.
Long Short

Note: Low and High figures are for the trading day.

Data provided by
Gold
Bullish
Oil - US Crude
Bullish
Low
High
of clients are net long.
of clients are net short.
Long Short

Note: Low and High figures are for the trading day.

Data provided by
Bitcoin
Bearish
More View more
Real Time News
  • Indices Update: As of 19:00, these are your best and worst performers based on the London trading schedule: Wall Street: 0.26% US 500: 0.26% Germany 30: -0.01% France 40: -0.10% View the performance of all markets via https://www.dailyfx.com/forex-rates#indices https://t.co/svIjzlLJBu
  • We are a few pips away from seeing a $EURUSD close above or below Friday's end. As of Friday, 9 of the past 10 trading days were lower. An extreme with some interesting pedigree: https://t.co/qxYhbzZuVZ
  • RT @EUCouncilPress: #Eurogroup is over! Watch the press conference with @mariofcenteno, @PaoloGentiloni and @ESM_Press Regling LIVE at +/…
  • IG Client Sentiment Update: Our data shows the vast majority of traders in Ripple are long at 96.87%, while traders in USD/CAD are at opposite extremes with 83.13%. See the summary chart below and full details and charts on DailyFX: https://www.dailyfx.com/sentiment https://t.co/54YP4FM9nw
  • Commodities Update: As of 17:00, these are your best and worst performers based on the London trading schedule: Silver: 0.30% Oil - US Crude: 0.18% Gold: -0.14% View the performance of all markets via https://www.dailyfx.com/forex-rates#commodities https://t.co/TmyP5d1RBD
  • Here is the MSCI's World Equities ETF overlaid with the aggregate stimulus from the Fed, ECB, BOE and BOJ. That stimulus is level out despite a rise from 3 of those 4, largely due to rising US Dollar (the pricing currency here) https://t.co/GlxkPs4xZN
  • Forex Update: As of 17:00, these are your best and worst performers based on the London trading schedule: 🇨🇦CAD: 0.16% 🇨🇭CHF: 0.11% 🇳🇿NZD: 0.10% 🇪🇺EUR: 0.07% 🇯🇵JPY: -0.12% 🇬🇧GBP: -0.27% View the performance of all markets via https://www.dailyfx.com/forex-rates#currencies https://t.co/COoUBRv8Z5
  • Indices Update: As of 17:00, these are your best and worst performers based on the London trading schedule: US 500: 0.28% Wall Street: 0.27% Germany 30: 0.01% France 40: -0.07% View the performance of all markets via https://www.dailyfx.com/forex-rates#indices https://t.co/fbpBesDErN
  • Contrary to standard belief, greed and profits are often inversely correlated in trading. Remaining disciplined is key to a successful trading strategy. Learn how to control greed when trading here: https://t.co/RvxpJotFf9 https://t.co/87FHc0QKOo
  • At the Eurogroup's meeting today, the coronavirus was mentioned as a temporary curb to growth
Forex Strategy Outlook: Euro Volatility Highest Since Crisis

Forex Strategy Outlook: Euro Volatility Highest Since Crisis

2011-09-26 15:03:00
David Rodriguez, Head of Product
Share:

DailyFX Individual Currency Pair Conditions and Trading Strategy Bias

forex_strategy_euro_us_dollar_breakout_body_Picture_1.png, Forex Strategy Outlook: Euro Volatility Highest Since Crisis

DailyFX+ System Trading SignalsOur new DailyFX+ trading signals have started off the week with strength, going aggressively short “risk” and buying into sharp Japanese Yen and US Dollar advances. The Breakout Opportunities system looks attractive on high volatility expectations across the board, while the Optimal Entry system has done well through recent volatility and look poised to do well going forward.

The clear caveat remains volatility itself: traders should trade with reduced leverage on the real risk that markets will quickly reverse and potentially force large trading losses. This is especially true for Japanese Yen pairs amidst heightened risk of Bank of Japan/Ministry of Finance forex market intervention. Traders should monitor risk closely and keep leverage low despite the relative attractiveness of certain trading systems.

Market Conditions:

Our DailyFX Volatility Indices are now near their highest levels since the height of the financial crisis in late 2008. Indeed, a glance at their recent patterns shows a trend of higher highs and lower lows. Markets are increasingly positioned for sharp moves, and such conditions warn aggressively against low-volatility range trading systems until further notice.

forex_strategy_euro_us_dollar_breakout_body_Picture_2.png, Forex Strategy Outlook: Euro Volatility Highest Since Crisis

Written by David Rodríguez, Quantitative Strategist for DailyFX.com, drodriguez@dailyfx.com

To be added to this author’s distribution list, send an e-mail subject line “Distribution list” to drodriguez@dailyfx.com

Definitions

Volatility Percentile – The higher the number, the more likely we are to see strong movements in price. This number tells us where current implied volatility levels stand in relation to the past 90 days of trading. We have found that implied volatilities tend to remain very high or very low for extended periods of time. As such, it is helpful to know where the current implied volatility level stands in relation to its medium-term range.

Trend – This indicator measures trend intensity by telling us where price stands in relation to its 90 trading-day range. A very low number tells us that price is currently at or near monthly lows, while a higher number tells us that we are near the highs. A value at or near 50 percent tells us that we are at the middle of the currency pair’s monthly range.

Range High – 90-day closing high.

Range Low – 90-day closing low.

Last – Current market price.

Bias – Based on the above criteria, we assign the more likely profitable strategy for any given currency pair. A highly volatile currency pair (Volatility Percentile very high) suggests that we should look to use Breakout strategies. More moderate volatility levels and strong Trend values make Momentum trades more attractive, while the lowest Vol Percentile and Trend indicator figures make Range Trading the more attractive strategy.

HYPOTHETICAL PERFORMANCE RESULTS HAVE MANY INHERENT LIMITATIONS, SOME OF WHICH ARE DESCRIBED BELOW. NO REPRESENTATION IS BEING MADE THAT ANY ACCOUNT WILL OR IS LIKELY TO ACHIEVE PROFITS OR LOSSES SIMILAR TO THOSE SHOWN. IN FACT, THERE ARE FREQUENTLY SHARP DIFFERENCES BETWEEN HYPOTHETICAL PERFORMANCE RESULTS AND THE ACTUAL RESULTS SUBSEQUENTLY ACHIEVED BY ANY PARTICULAR TRADING PROGRAM.

ONE OF THE LIMITATIONS OF HYPOTHETICAL PERFORMANCE RESULTS IS THAT THEY ARE GENERALLY PREPARED WITH THE BENEFIT OF HINDSIGHT. IN ADDITION, HYPOTHETICAL TRADING DOES NOT INVOLVE FINANCIAL RISK, AND NO HYPOTHETICAL TRADING RECORD CAN COMPLETELY ACCOUNT FOR THE IMPACT OF FINANCIAL RISK IN ACTUAL TRADING. FOR EXAMPLE, THE ABILITY TO WITHSTAND LOSSES OR TO ADHERE TO A PARTICULAR TRADING PROGRAM IN SPITE OF TRADING LOSSES IS MATERIAL POINTS WHICH CAN ALSO ADVERSELY AFFECT ACTUAL TRADING RESULTS. THERE ARE NUMEROUS OTHER FACTORS RELATED TO THE MARKETS IN GENERAL OR TO THE IMPLEMENTATION.

OF ANY SPECIFIC TRADING PROGRAM WHICH CANNOT BE FULLY ACCOUNTED FOR IN THE PREPARATION OF HYPOTHETICAL PERFORMANCE RESULTS AND ALL OF WHICH CAN ADVERSELY AFFECT ACTUAL TRADING RESULTS. Any opinions, news, research, analyses, prices, or other information contained on this website is provided as general market commentary, and does not constitute investment advice. The FXCM group will not accept liability for any loss or damage, including without limitation to, any loss of profit, which may arise directly or indirectly from use of or reliance contained in the trading signals, or in any accompanying chart analyses.

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

DISCLOSURES

News & Analysis at your fingertips.