Who to trust during the high volatility events?

The financial markets have been shaken recently by high volatility due to the slew of fundamental and geopolitical events surrounding the main currencies of the globe. The Euro has been losing ground amid worries about Greece and its future plans, the Dollar has been gaining ground on a possible rate hike by the FED during this year, and the Swiss Franc gained an amazing 20% versus the Euro after the National Swiss Bank let the currency float freely.

The events that came after the announcement by the National Swiss Bank, was a test to the most important Forex brokers around the world. Alpari had to declare itself insolvent, FXCM had to be bailed out by an outside company, and even CitiFX reported millions of Dollars in client loses during the National Swiss Bank event.

But this was also a good opportunity to see which brokers handled the situation professionally. Actually, the brokers that best came out of the recent events were the brokers that took measures before the panic started. For instance, Dukascopy raised its margin requirements on the CHF crosses since October and so did ActivTrades since November. This prevented the clients from these brokers from suffering huge losses on their accounts. The official announcement by ActivTrades may be found here:

http://www.activtrades.co.uk/index.aspx?page=important_announcement

Possible test and bounce at the 133.00 level on the EUR/JPY

After today’s statement from the FED, the Euro versus the Yen started to move rapidly in both directions, but after a moment of high volatility, the pair seemed to have chosen to go down. The next support on the pair is the 133.00 level. Let’s be on the lookout for a possible visit of the price to the 133.00 level, from where we may see a bounce to the upside. If the price does not bounce, but breaks below this level, the best thing to do is to wait for the pullback for a possible short entry.

What is the daily turnover in the Forex market?

The volume of trades that are being executed daily in the Foreign Exchange Market is rising. The average daily volume for the month of October in North America was more than one trillion Dollars. Daily Forex volume turnover in the United Kingdom has also been on the rise, reaching record highs in April of last year. That month, the daily average turnover for the Forex market was 2.7 trillion Dollars. In Japan the daily Forex turnover is rising as well with 373 billion Dollars exchanging hands on a daily basis.

The data shows that more traders are being attracted to the Forex market every day and the Forex stays as the financial market with the highest expansion rate. However, we must keep in mind that the rising figures in the Forex daily turnover is also being caused in great part by the rising volatility. The divergent monetary policies between the FED and the European Central Bank has fueled the current volatility that we are seeing in the markets and that is why volumes are also rising.

The GBP/JPY tests the 179.00 level

The GBP/JPY has retraced more than 300 pips during today’s session. On its way to the 179.00 level, the pair encountered some resistance around the round number levels, where it tried to consolidate for a while, but the price kept rising until reaching the 179.00 level. From that zone, the price may try to bounce back down, but we must be attentive to a possible breakout, which could take the price to the next round number level of 180.00.

Pullback on the EUR/JPY to the 133.00 level

The Euro remains weak versus most of its major counterparts and we can see on the 15 minute chart of the EUR/JPY that the drop has taken the price all the way to the 131.00 level. This is an amazing drop of more than 300 pips, from which the price bounces back up another 200 pips to visit for a second time the 133.00 level. When the price broke the 133 level to the downside today at the beginning of the trading session, it pulled back to the 133 which acted as a resistance, this time the 133 level seems to be acting again as a good resistance and the price may go back down to its medium term bearish trend.

The EUR/JPY is close to touching the 134.00 level

The Euro has weaken versus the main currencies, including the Yen. The pair has dropped so rapidly that it is very close to the 134.00 level and we could see the price testing that level. The round number level could act as support for the pair but if this Friday’s manufacturing data out of Europe comes out lower than expected, then the pair may break that level to the downside.

Another drop on the AUD/USD

The Australian Dollar has come back to the 0.8100 level versus the US Dollar, but we can clearly see that the level has been a very good support for this currency pair. The price may try to stall at this zone or even try to bounce to the upside. But we must keep in mind that as he price keeps testing the same support over and over, the chances of a breakout to the downside are higher. Therefore, we must be vigilant to a possible breakdown, which could take the price all the way to the 0.8000 level.