Volatility In Almost Every Currency
Littlefish FX | Aug 25, 2015 02:26AM ET
I’m sure wherever you go; you have been hearing the same thing. Blood on the floor; total carnage; what was that; this is madness; OMG; who is behind all this; is this for real and my personal favorite and I thought I have seen all sort of market conditions but I found out today, I was wrong.
Was it the dollar weakness; or was it the crash on the stock market or was it yen who was the culprit. Were there any usual suspects behind it, hedge funds / CB or perhaps Aliens.
Whatever it was; it brought the best of the best to its’ knee. Usually we would expect low volume / low volatility for August, but was not the case today. It was the case of two currencies on Friday, where US dollar decided to dip and EUR decided it had enough of lackluster move and decided to try up-north. They were to an extend challenge by yen, but it was the EUR who was the dictator and was dictating till the closing bell on Friday.
Then came the weekend and all whispers were about what EUR was up-to. There were some after shocks on Stocks as well on Friday, where something was felt that was not normal in terms of behavior on them. As we have been seeing over the past good 7-9 months, any hard dips on stocks was almost instantaneously bought for newer all time highs. It was thought perhaps this time the decline was bit harder and deeper than last time, but most thought of it as a better buying opportunity.
Fast forward and it was opening bells for the current week. The date was 24/05/2015, and with the opening bells, we heard a roar like the resident of Pompeii felt prior to its’ eruption and the rest can be look up on the history books, what happened next.
The slaughter house was set; weekend perhaps was the calm before the storm and then all hell broke lose. USD/JPY was in a mood to show it doesn’t like to be the second best and showed its sharp teeth, sharpen claws and appetite that was saying feed me more. It was a beast unleashed and it didn’t care nor respected anything that came in front. It didn’t even spare the Mighty EUR and it showed it meant business on the word GO.
The rest that followed will be written down in the history books; the almost 150 USD slide on SPX or 200 USD decline in 2 trading days, 1000+ plus pips surge on EUR/AUD on a single day, 800+ drop on GBP/JPY and the list goes on.
It’s not that we haven’t seen such ferocity of moves before; we have seen bigger than these. What makes this truly amazing is that in the past it was usually one currency that gets all the volatility (as we saw on CHF on Jan 15, 2015 when SNB took out the EUR/CHF flooring); but today, it was the case with almost every currency. NZD/USD flashing 300+ pips nose dive and covering that within moments and well the list goes on. Perhaps gold was the only quieter one that wasn’t truly moved or bother with what was going all around. However, it decided to increase the past 2 trading range with some drop towards the end of the trading day.
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In the end, it didn’t matter who you are and what you think on the pairs or the market in general; it was total carnage and madness and we simply hope that you were spared of this madness.
I decided to layout few sketches on the pairs, but would strongly advise if the volatility stays like yesterday, be very cautious and use stop-loss.
Last but not least, my special yesterday was on the JPY and suspected it will turn out to be a monster, but I seriously wasn’t expecting this. Also suggested drop on the SPX to continue, but this drop surpass expectation as well.
EUR/JPY
Feeling lower up on the pair. 138.20-4X expected resistance and if holds, can see a drop heading for 134 handle.
EUR/JPY 8 hr – We can break support for move towards 134 handle before more fallout
EUR/JPY 2 hr – Either side break of the trend line will follow the move to that side
EUR/JPY Daily – Showing 134 zone as base of a wedge
NZD/USD
Suggesting it can attempt to stage a rally if can stay higher to T2 and especially closing the day higher to it to begin with.
NZD/USD 8 hr – Holding higher to T2 can provoke bounces to T3 to start with
USD/CHF
USD/CHF Daily – Approaching base of the channel and a possibly bounce expected off there T1
USD/JPY – This could get uglier
Nothing much to pen here beside keep an eye on the stocks; if they slip further, USD/JPY just may decide to try out 111 handle.
USD/JPY Daily – Dangerous looking steps if decides to fall further
USD/JPY Daily – Dangerous looking steps if decides to fall further – Close Up View
GBP/JPY
Can’t say much. The pair can still do a move close to 182 handle. Either GBP decides to pull up and make its way higher else GBP/JPY can get hit out.
GBP/JPY 8 hr – Scary and that’s all I can say, especially if USD/JPY decides to break under 115.9X en-route to 111
USD/CAD
Falling oil price or plain simple shaky and weaker commodity currencies including AUD / NZD.
Knock on 1.34 handle likely coming. T5 good enough spot on the charts to try shorts though.
USD/CAD 8 hr – T5 likely test coming and that means more brutality on its crosses
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