The power of the volatility indicator

In the US forex session first, we take a look at the GBP/CHF which had been the focus earlier in the morning, with a clean trading opportunity higher in a steady even trend. But, as we saw at the time, volatility was then triggered and as always this is a warning signal of potential danger ahead. And for us as traders, danger means congestion or worse still, a reversal, which was indeed the case with the pair reversing lower and moving into a strongly bearish trend thereafter. The volatility indicator is immensely powerful as it signals market maker participation and the potential for trap moves.

Moving on from the GBP, the single currency became our focus on the euro complex, and in particular on the EUR/AUD. And what was clear from an analysis of the currency matrix and the charts, was this move was being driven primarily by Aussie dollar weakness with the trend monitor indicator helping to keep us in to maximize returns from every trading opportunity.