With US markets closed for the 4th of July celebrations, consolidation and thin price action was the order of the day at the start of the London forex session, with most pairs moving sideways. In addition with little news to drive sentiment, this too added to overall lack of direction, all of which was made abundantly clear on the currency strength indicator which provided a clear view. Whilst we use the indicator to reveal strength and reversal opportunities, it is equally powerful highlighting those currencies and pairs to avoid for the time being, and this was clearly demonstrated in the session.
And with thin markets comes volatility, and the volatility indicator was in evidence as the market makers took the opportunity to move markets in whipsaw price action clearly signalled on the volatility indicator which reveals where the price action is heading next! And best of all, it triggers before the candle has closed, once the average true range metric has been reached.
Finally, whether the forex markets are roaring, or quiet as a lamb, volume reveals the opportunities available through the prism of volume price analysis. Volume is volume and comparative whether thin trading days as today, or when liquidity is deep. But even today, we were able to dig out a nice trade in the GBP/NZD using the faster timeframes, and the renko indicator coupled with the trend monitor indicator and the trends indicators.
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