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Extreme Complacency Grips Markets - We've Seen this Before

Extreme Complacency Grips Markets - We've Seen this Before

Jamie Saettele, CMT, Sr. Technical Strategist

FXCM Expo Videos

Innovative Techniques with Traditional Technical Indicators

Trading with the Elliott Wave Principle

Seeing the Forest from the Trees: An Analysis of Global Markets

Afternoon Technicals (all charts)

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Yesterday’s comments were “in my own experience, sleepless nights and simply wanting to give up on the trade idea tend to occur just before the expected move. Understanding your own psychology is paramount in trading. That said, I am flat now after being taken out on the spike above 10605. A drop below yesterday’s low (10530) or an obvious blowoff into the trendline just below 10700 (10680/90) offers the next opportunity.” Here we are less than 24 hours later and the AUDUSD is down nearly 1% from yesterday’s high. So was an important top registered yesterday? There is no way to know but metrics strongly suggest that the AUDUSD is much closer to an important top than bottom. Consider that;

1 week and 3 month AUDUSD volatility are at their lowest levels since late July 2007

1 month volatility just reached its lowest level since late April; the lowest reading prior to late April was late July 2007

1 year volatility is the lowest since early September 2008

Complacency is at an extreme level and most traders will probably be surprised by the events that unfold over the next few weeks. Join me for a webinar at DailyFX PLUS today at 1 pm as I’ll cover this and other opportunities.

AUDUSD – Weekly Bars

Extreme_Complacency_Grips_FX_Markets_-_Weve_Seen_this_Before_body_audusd.png, Extreme Complacency Grips Markets - We've Seen this Before

Prepared by Jamie Saettele, CMT

To contact Jamie e-mail Follow me on Twitter @JamieSaettele

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Jamie is the author of Sentiment in the Forex Market.

Meet the DailyFX team in Las Vegas at the annual FXCM Traders Expo, November 2-4, 2012 at the Rio All Suite Hotel & Casino. For additional information regarding the schedule, workshops and accommodations, visit the FXCM Trading Expo website.

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