Extreme Complacency Grips Markets - We've Seen this Before
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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
Prepared by Jamie Saettele, CMT
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Jamie is the author of Sentiment in the Forex Market.
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DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.