News & Analysis at your fingertips.

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. See our updated Privacy Policy here.

0

Notifications

Notifications below are based on filters which can be adjusted via Economic and Webinar Calendar pages.

Live Webinar

Live Webinar Events

0

Economic Calendar

Economic Calendar Events

0
Free Trading Guides
Subscribe
Please try again
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
More View more
Real Time News
  • Crude oil prices collapsed on Monday despite an OPEC+ breakthrough, driven by Covid-induced demand woes. Meanwhile, Gold is at odds with a stronger US Dollar and falling Treasury yields. Get your #crudeoil market update from @FxWestwater here:https://t.co/H1vmag8d1k https://t.co/1zuPdKUmyE
  • AUD/USD is likely to face increased volatility over the coming days as it faces a batch of key event risks going into the end of July. Get your Australian Dollar forecast from @DavidJSong here: https://t.co/qFpg0DCxxL https://t.co/quQxg4WBy3
  • The US Dollar outlook against ASEAN currencies like the Singapore Dollar, Thai Baht, Indonesian Rupiah and Philippine Peso remains bullish amid capital outflows risks as Covid cases swell. Get your market update from @ddubrovskyFX here:https://t.co/vRUVxvQP8o https://t.co/cUEkW9BfIP
  • Is investing in your favorite brand or buying its products the better financial move? Read the article for a breakdown. https://t.co/iWOlDAK8cD https://t.co/0uS5VvWj12
  • Crude oil prices collapsed on Monday despite an OPEC+ breakthrough, driven by Covid-induced demand woes. Meanwhile, Gold is at odds with a stronger US Dollar and falling Treasury yields. Get your #crudeoil market update from @FxWestwater here:https://t.co/H1vmag8d1k https://t.co/PW5pCw9dKR
  • The Japanese Yen has been making a comeback, but it may soon resume its decline against the US Dollar as USD/JPY consolidates within a bullish Falling Wedge. Watch for a breakout. Get your market update from @ddubrovskyFX here:https://t.co/zxRWoNR4lS https://t.co/bXTx0TSRmU
  • BTC/USD treading water sideways, 28600 the big level to watch. ETH/USD working on forming a nice-looking descending wedge. Get your market update from @PaulRobinsonFX here:https://t.co/H1qOV4FR1P https://t.co/tjutUl7Nt7
  • Gold hasn’t been very active the past few sessions, but that could change next week and provide a stronger trading bias. Get your weekly gold technical forecast from @PaulRobinsonFX here: https://t.co/HaEe3i4Sug https://t.co/LsARS2mnFI
  • Market uncertainty sees GBP pairs break out of their ranges. Get your weekly GBP forecast from @HathornSabin here: https://t.co/IRO7a6Jv8J https://t.co/4LxWz7sOVF
  • Forex Update: As of 20:00, these are your best and worst performers based on the London trading schedule: 🇳🇿NZD: 0.01% 🇪🇺EUR: 0.01% 🇨🇦CAD: -0.03% 🇬🇧GBP: -0.16% 🇦🇺AUD: -0.21% 🇯🇵JPY: -0.36% View the performance of all markets via https://www.dailyfx.com/forex-rates#currencies https://t.co/AXKeEsin95
What Is Possible from Volatility In Final Two Weeks of 2017?

What Is Possible from Volatility In Final Two Weeks of 2017?

John Kicklighter, Chief Strategist

Rather than start from a technical analysis or evaluation of theme and event risk, the best place to start your trade evaluations is an appreciation of more foundational considerations of the market. How is volatility and participation staging these next two weeks?

Talking Points:

  • Volatility is extremely low, even by seasonal standards - and that should keep us on our guard
  • VIX has closed below 10 for 50 days so far in 2017 and the 52-week average of the index is at a record low 11.1
  • The final two weeks of the year are historical extremely quiet, but this time of reflection may set up a serious turn in 2018

Breakouts and trends are extremely uncommon in current market conditions. Standard are measured ranges with draw nearer targets and stops for traders. But that is exactly the conditions best suited to retail traders. See how these traders are positioning on pairs like USD/CAD and AUD/USD on the DailyFX Sentiment page.

Unless you've been away from the markets all year, you are already familiar with the fact that volatility is extremely low. In fact, it is at unprecedented levels by many different measures. While many of us start our search for trade opportunities by looking for the most loaded technical pattern or laying out plans for high profile event risk, the most important starting point for our analysis is market conditions. Do activity levels and participation seem capable of offering the heavy lifting necessary to fostering larger and more difficult developments like extending or reversing mature trends? How about generating a key breakout with strong follow through? Or are these critical features of the system only conducive for processing measured moves within ranges and quick-to-deflate breakouts? Answering those questions from the jump puts us in the best position to filter reasonable trades.

Looking at volatility, we are left with an immediate impression of what type of trades we should be pursuing - especially over these final two weeks of the year. Taking stock of the favorite volatility measure - the VIX Index - we are faced with extremes. Even before taking into account the seasonal norm of the final two weeks representing one of the thinnest and least active periods of the year, our activity levels are unprecedentedly low. In fact, a measure for the entire year, we find the 52-week moving average of the VIX is currently standing at 11.1 - indicating that not only are we at unparalleled levels of quiet but it has persisted far longer than any other time over the 27 years the index has been tracked. Another means of looking at this is the tally of days the VIX has closed below 10. As of Friday's close, it was 50 days which is equivalent to approximately 20 percent of the year. There are only two other clusters of incidences in the past that the indicator has gotten this low for a few days and those were explicitly holiday periods of 2006 and 1993. In other words, conditions are extremely quiet - almost certainly, too quiet.

There are health and unhealthy reasons for activity levels to be low - and inversely for markets to outperform. The 'right' reasons for volatility to be very low in the financial markets is a particularly robust economic performance and outlook, movement towards deeper globalization, strong circulation of capital in local and global systems, and steadily rising rates of return. We are clearly not checking off these boxes. Alternatively, the 'wrong' reasons to see volatility deflate to extremely low levels can be unique to the situation; and currently that motivation is the presence of the strong outside forces of global central banks. Massive stimulus programs have provided a sense of confidence that a supranatural entity will save us from our poor investments, but truly this is a situation where markets are forced to stretch for returns due to the utter lack of income. So they find it in capital gains and lower their use of hedges for safety because it is too expensive. This is an unstable environment. Yet, we are unlikely to reconcile this to realistic terms in 2017. Seasonal curbs will have their influence; but during this time, there will be a period of reflection. Will traders and investors be this bold and complacent when liquidity returns in 2018? We discuss the nature and importance of volatility through the end of the year and start of the next in this weekend Quick Takes Video.

To receive John’s analysis directly via email, please SIGN UP HERE.

What Is Possible from Volatility In Final Two Weeks of 2017?What Is Possible from Volatility In Final Two Weeks of 2017?What Is Possible from Volatility In Final Two Weeks of 2017?

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

DISCLOSURES