Volatility & the euro

cadSo far in this morning’s forex trading session it’s been a case of selling the euro and buying the commodity dollars, with a strong move lower also in the EUR/JPY, although this bearish sentiment towards the euro has not been as strong in eurodollar.

What is particularly interesting in the euro pairs is the extent to which today’s moves are in the process of reversing Monday’s bullish volatility candles on the daily chart. As regular attendees to our Friday forex webinars will know, as traders volatility can be our greatest friend or deadliest enemy, and Monday’s extreme market reaction which resulted in price ranges well outside the ATR for the euro pairs is a perfect example of how we can use this event to our advantage.

Of the pairs in our euro matrix, only the EUR/AUD, EUR/GBP and EUR/NZD are still trading within the range of Monday’s candle, and with the remaining three pairs, namely the EUR/JPY, EUR/CAD and EUR/USD trading at Monday’s lows. The priority for these latter pairs is to see whether Monday’s reversal can be sustained. For the pairs still trading within Monday’s volatility candle there is still some way to go and much will depend on whether the current bearish sentiment towards the euro is maintained and continues into September.

What has also been a feature in euro trading this morning has been the relatively muted move to the downside in the eurodollar, which comes as no great surprise given the presence of the VPOC on the daily chart, which of itself would help to contain any price move.

For eurodollar it will be the US session which will determine whether this morning’s selling will continue, particularly as we have two key items of fundamental news for the USD, namely the unemployment claims and the q/q preliminary GDP number. In addition, we have the start of the Jackson Hole Symposium which too should add its own influence to the price action.

By Anna Coulling

Indicators from Quantumtrading

About Anna 1030 Articles
Hi – my name is Anna Coulling and I am a full time currency, commodities and equities trader. I have been involved in both trading and investing for over fifteen years and have traded many different financial instruments, from options and futures to stocks and commodities. I write and publish articles ( mostly for free ) for UK and international publications on a wide variety of financial issues, and in particular I enjoy helping others learn how to invest and trade.

6 Comments on Volatility & the euro

  1. Hi Anna, do you think it’s okay to go offshore so I don’t have to pay taxes from forex?

    How does it work in the UK with taxes?

    • Hi James – I’m not a tax expert I’m afraid so cannot comment on this aspect. As far as UK tax is concerned the theoretical solution is to use a spread betting account, but this is not guaranteed as this is likely to be seen as your full time occupation if you are trading full time. There is a book on Amazon called Tax Planning For Forex Traders by Lee Hadnum which you might find useful – hope this helps and all best wishes – Anna

      • Hi Anna – I just purchased your Forex for beginners but I’m a UK citizen living in Hong Kong. I know this question is bit of a reach, but do you have any recommendations/links for HK brokers or a broker with an international presence? also, does the book by Lee Hadnum cover Hong Kong / other jurisdictions?

        Great website and books by the way!

        Thanks
        Pardeep

        • Hi Pardeep – many thanks for your very kind comments which are much appreciated and I’m so pleased you enjoyed reading the Forex For Beginners book and found it enjoyable – and also delighted you like the site:-) With regard to your questions, the best place to start looking for an MT4 broker is http://www.100forexbrokers.com which is a great site and provides a complete list of all the brokers around the world and their classification. I would suggest you consider brokers who are either ECN or STP as this will avoid any dealing desk issues of the market maker type of broker. In terms of tax, I’m not sure Lee’s book covers all the various parts of the world and much will depend on your own tax status and whether you are an ex-pat etc, so I would urge you to take professional tax advice here. All I can say is that whilst spread betting is promoted as ‘tax free’ in the UK, the reality is very simple in that if the authorities believe a trader is trading full time with no other income, then this is considered his or her income and therefore taxed accordingly! Hope this helps and many thanks once again and look forward to meeting you in one of my trading rooms – all best wishes – Anna

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