Our DailyFX+Forex Trading Signals have seen their best performance in recent memory, as extraordinarily volatile currency price moves create an excellent environment for our proprietary trading strategies. Forex market conditions continue very strained, and our 1-week Volatility Index continues near its highest levels on record. Our 1-week indicator shows that forex options traders predict price movements will remain nearly as volatile in the next seven days as they have been in the past week, and traders should exercise great caution in trading current market conditions. Our forex trading signals remain on free access for a limited time, so be sure to visit DailyFX+ before the trial period is through.
DailyFX+ System Trading Signals – All Momentum and Breakout-based systems, with the exception of “Momentum1”, have significantly outperformed as of late. Extended trends and very clear breakouts have undoubtedly contributed to the effectiveness of these trading strategies, and a continuation of these market conditions would make for similarly good trading in the week ahead.
Our “Momentum2” strategy is now wrapping up its best single-month record ever, as it has accurately tracked sharp US dollar and Japanese Yen appreciation—flipping near the short-term top in the USD and JPY against major currency pairs. One has to wonder whether “Momentum2” can continue its clear winning streak, but recent market conditions have clearly done well for the market sentiment-based strategy.
That said, both Range strategies have been the worst-performers through recent trade, as these strategies have frequently tried to buy strong price declines or sell sharp rallies—hardly a sound strategy in times of market stress. We would place great caution on any “Range1” or “Range2” trades through the foreseeable future; we prefer to wait until our individual currency pair “Volatility Percentiles” drop below 75 percent before attempting to use range trading strategies.
Speculative Sentiment Index Trading Signals – Traditional SSI-based trading signals have seen some challenges through recent trading, as sentiment extremes in the SSI have not necessarily corresponded with opposing price moves. Given that our traditional SSI signals are produced with a medium-to-long-term time frame in mind, sharp short-term price moves clearly represent a risk to the strategies. Visit our Forex Trader Sentiment and Positioning Thread on the FX Forum to discuss these signals.
Dynamic Carry Trade Basket – Please see our weekly report on Carry Trades for a better idea on what to expect through short-term trade: Forex Carry Trade Outlook.
Volatility Percentile – The higher the number, the more likely we are to see strong movements in price. This number tells us where current implied volatility levels stand in relation to the past three months of trading. We have found that implied volatilities tend to remain very high or very low for extended periods of time. As such, it is helpful to know where the current implied volatility level stands in relation to its medium-term range.
Trend – This indicator measures trend intensity by telling us where price stands in relation to its 90 trading-day range. A very low number tells us that price is currently at or near quarterly lows, while a higher number tells us that we are near the highs. A value at or near 50 percent tells us that we are at the middle of the currency pair’s quarterly range.
Range High – 90-day closing high.
Range Low – 90-day closing low.
Last – Current market price.
Strategy – Based on the above criteria, we assign the more likely profitable strategy for any given currency pair. A highly volatile currency pair (Volatility Percentile very high) suggests that we should look to use Breakout strategies. More moderate volatility levels and strong Trend values make Momentum trades more attractive, while the lowest Vol Percentile and Trend indicator figures make Range Trading the more attractive strategy.
The information contained herein is derived from sources we believe to be reliable, but of which we have not independently verified. FOREX CAPITAL MARKETS, L.L.C.® assumes no responsibility for errors, inaccuracies or omissions in these materials, nor shall it be liable for damages arising out of any person’s reliance upon this information. FOREX CAPITAL MARKETS, L.L.C.® does not warrant the accuracy or completeness of the information, text, graphics, links or other items contained within these materials. FOREX CAPITAL MARKETS, L.L.C.® shall not be liable for any special, indirect, incidental, or consequential damages, including without limitation losses, lost revenues, or lost profits that may result from these materials. Opinions and estimates constitute our judgment and are subject to change without notice. Past performance is not indicative of future results.