There have been some volatile intra-day moves over the course of the last week that have failed to follow through, with pairs locked in ranges that they cannot seem to easily break. We have seen dollar strength and dollar weakness in equal measure. We have also seen a swing point on most pairs setting up on the daily charts said TheLFB-Forex.com Trade Team members. We have seen a pound that is bullish on the dollar, an aussie pair that is easily finding bids, and we have cad at a level that it has exploded from previously, both ways.
We have euro and yen looking for economic and equity reactions, and a swiss pair that is in the shadow of Fed Treasury moves and the head of the Swiss National Bank threatening intervention. We can look at the technical set-ups, the fundamental set-ups, and the mix of them all, but at the end of the day, whatever our opinions, these markets are not going to be moving too far in any direction because of one thing; Market Participation. We have no volume. the Trade Team said.
None of the recent forex set-ups are generating enough speculative interest to do anything more than oscillate around the daily chart simple moving average areas; it seems that half of the markets are watching and waiting for the other half to break price points down.
We run a ten period moving average through the volume study, just to even out the ebbs and flows of wherever the forex feed gets filled and whatever inter-bank participant delivers the end price. That average read is hitting the decks on all of the major pairs right now, and until the volume picks up we will not be going too far either way.
The Average trading Ranges are also low, indicating that speculative interest is all on the sidelines, and that is why it is so easy for all global commodity markets to hold the daily chart Simple Moving Averages as easily as they are doing now. This is a bit like getting dealt a pair of Queens in a poker game; we know that they look good, we know that our pot odds are favorable, but unless a few more players get involved, we may be holding them until the River as we maneuver around the fact that not enough people want to get involved with things. The Trade Team said.
Sit tight and wait it out, but whatever happens, unless a major support or resistance area gets broken on increasing volume, we really should not be getting too exposed. We have seen recently that low volume equates to failed break-outs and consolidation, neither of which are that appealing. However, once these price points break, and that will be on the next major leg of equity trade, the volume and ATR will slide higher in quick fashion. The technical and fundamental mix right now is very important to monitor.
As forex traders it seems that there has never been a more important time to monitor the fundamental driver of each pair, and to ensure that things are aligned so that volume and speculative interest have no option other than to join in when the next major break comes.