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
Bullish
GBP/USD
Bearish
USD/JPY
Bearish
Gold
Bullish
Oil - US Crude
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
Bitcoin
Mixed
More View more
Real Time News
  • Have you joined @DailyFX @facebook group yet? Discuss your #forex strategies and brush up on your skills with us here: https://t.co/jtY1G7g8yx https://t.co/T63Op8nFm6
  • Today's FX option expiries - $EURUSD 1.0825-35 (1.1bln), 1.0850-60 (900mln), 1.0875-80 (1bln) - $AUDUSD 0.6675 (1.4bln) - $EURJPY 119.90 (873mln)
  • IG Client Sentiment Update: Our data shows the vast majority of traders in Ripple are long at 96.65%, while traders in USD/CAD are at opposite extremes with 69.06%. See the summary chart below and full details and charts on DailyFX: https://www.dailyfx.com/sentiment https://t.co/HhJsadutsV
  • Commodities Update: As of 08:00, these are your best and worst performers based on the London trading schedule: Oil - US Crude: 0.12% Gold: -0.73% Silver: -1.26% View the performance of all markets via https://www.dailyfx.com/forex-rates#commodities https://t.co/lUE1dizUX7
  • Missed today's #AUDUSD weekly outlook webinar? See the recording here - https://t.co/8qO72jQ09n Topics included: - #Coronavirus fears' impact on AUD price action - Aussie Dollar technical analysis - #RBA, #Fed monetary policy outlook
  • The AB=CD pattern is simple once you know how to spot it and draw the proper Fibonacci retracements. Make your trading strategy as simple as ABCD here: https://t.co/AKmlmaAZBS https://t.co/SQidi62RGj
  • Forex Update: As of 08:00, these are your best and worst performers based on the London trading schedule: 🇬🇧GBP: 0.17% 🇦🇺AUD: 0.12% 🇨🇭CHF: 0.07% 🇯🇵JPY: 0.04% 🇪🇺EUR: 0.01% 🇳🇿NZD: -0.08% View the performance of all markets via https://www.dailyfx.com/forex-rates#currencies https://t.co/f8hmtUd9pl
  • Indices Update: As of 08:00, these are your best and worst performers based on the London trading schedule: US 500: 0.95% Wall Street: 0.88% Germany 30: 0.80% France 40: 0.76% View the performance of all markets via https://www.dailyfx.com/forex-rates#indices https://t.co/6JMsIfRGtb
  • EUR/USD Technical Analysis: Euro Drop May Be About to Resume - https://www.dailyfx.com/forex/technical/home/analysis/eur-usd/2020/02/25/EURUSD-Technical-Analysis-Euro-Drop-May-Be-About-to-Resume.html #EURUSD #technicalanalysis https://t.co/mn0q0xw02x
  • What are the six different types of stocks every trader should know? Find out from @WVenketas here: https://t.co/yO3JalkqUU https://t.co/ihHwmPxZAk
Forex Strategy Outlook: Volatility Down, US Dollar and Yen May Falter

Forex Strategy Outlook: Volatility Down, US Dollar and Yen May Falter

2011-10-11 15:00:00
David Rodriguez, Head of Product
Share:

DailyFX Individual Currency Pair Conditions and Trading Strategy Bias

forex_strategy_outlook_breakouts_body_Picture_1.png, Forex Strategy Outlook: Volatility Down, US Dollar and Yen May Falter

DailyFX+ System Trading SignalsIt was a tough week for Breakout Opportunities and Optimal Entry trading systems, getting stopped out frequently as major pairs went opposite their recent trends and corrected higher. A noteworthy drop in volatility expectations suggests that Breakout trades will likely continue to underperform.

Indeed, we are mostly in favor of range trading key currency pairs until further notice. Until the EURJPY, AUDJPY, GBPJPY, and EURUSD end their trend of higher highs and lower lows, it seems ill-advised to sell.

Breakout Opportunities and Optimal Entry continue attempting shorts on these pairs because the Speculative Sentiment Index gives contrarian signal that they may continue their declines. Yet these systems work best during times of higher market volatility. We may need to wait until our Volatility Percentiles pick up before following these trading signals.

Market Conditions:

Our DailyFX Volatility Indices recently broke their trend of higher lows and higher highs, warning that we could enter a period of smaller currency moves and warning against aggressive bets on major breakouts. The 3-month DailyFX Volatility Index remains just narrowly above the psychologically significant 10 percent mark—often what marks shifts in currency trading conditions. We will monitor this number closely and change trading styles accordingly.

forex_strategy_outlook_breakouts_body_Picture_2.png, Forex Strategy Outlook: Volatility Down, US Dollar and Yen May Falter

--- Written by David Rodriguez, Quantitative Strategist for DailyFX.com

To contact David, e-mail drodriguez@dailyfx.com

To be added to David’s e-mail distribution list for this and other reports, 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.