After two days of terrific price action with risk on risk off sentiment swinging wildly, we were expecting a muted start to the London forex session, but not to be! Once more markets were in a febrile state with an explosive start as Europe opened with strong selling of the risk currencies and equally strong buying of commodity currencies with the Aussie, the New Zealand dollar and the Canadian dollar all spiking higher. These moves all had one universal theme – volatility – and as always after volatility inevitably comes congestion followed in this case by a complete reversal, as risk on appetite evaporated with the morning dew. And following yesterday’s cataclysmic sell off, risk off sentiment is once more in the ascendancy. Such moves also one other common factor which is market maker participation, and as always revealed through the prism of volume price analysis and what was crystal clear, these moves were all triggered by the market makers, and once the traps had been sprung, those traders jumping in were then left regretting this decision in this short squeeze.
Moving away from NinjaTrader and back to MT5 here it was the GBP/AUD back in focus and in particular the volume point of control and a great indicator from many different perspectives. Not least in defining breakaways when combined with volume, but also defining those areas for stop loss placement.