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Forex: What Does the Risk Backdrop Say About a AUDUSD Breakout?

Forex: What Does the Risk Backdrop Say About a AUDUSD Breakout?

John Kicklighter, Chief Strategist

Talking Points:

• Volatility - a stand in for sentiment - continues to slide into greater extremes

• There are plenty of trade options for a realized 'fear' swell but few triggers to instigate

• We look at AUDUSD and other pairs in context of the volatility backdrop

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AUDUSD has worked its way into a clear pennant formation. This technical pattern typically ends in with continuation, but volatility and the fundamentals they represent will have a say in its ultimate direction. For some currencies and markets (S&P 500, Australian dollar), low volatility is a key support as it further encourages investors to expose themselves for greater gains. For others (US dollar, yen, Treasuries), strength is found in the 'fear' assessed in a higher volatility backdrop. In today's video, we look at the prevailing trends - and the extremes they promote - in the context of trade setups on AUDUSD, yen crosses and other primed markets.

Download the consecutive bar indicator John used in today's video to measure the historical significance and over-extended level of the markets.

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

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