DailyFX: Volatility Drop Favors USD, JPY Losses

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DailyFX: Volatility Drop Favors JPY, USD Losses A sharp drop in forex market volatility expectations warns that Breakout Opportunities systems may do poorly in the days ahead, favoring US Dollar and Japanese Yen weakness as markets retrace previous moves. DailyFX+ System Trading Signals -It was a tough week for Breakout Opportunities and Optimal Entry trading systems, getting stopped out frequently as major pairs went opposite their recent trends and corrected higher. A noteworthy drop in volatility expectations suggests that Breakout trades will likely continue to underperform.   Indeed, we are mostly in favor of range trading key currency pairs until further notice. Until the EURJPY, AUDJPY, GBPJPY, and EURUSD end their trend of higher highs and lower lows, it seems ill-advised to sell.   Breakout Opportunities and Optimal Entry continue attempting shorts on these pairs because the Speculative Sentiment Index gives contrarian signal that they may continue their declines. Yet these systems work best during times of higher market volatility. We may need to wait until our Volatility Percentiles pick up before following these trading signals.   Download the Full Article Best regards, David Rodríguez, Quantitative Strategist drodriguez@dailyfx.com DailyFX Home | research@dailyfx.com | Contact US ©2009 DailyFX. All Rights Reserved. Forex Capital Markets, L.L.C.® assumes no responsibility for errors, inaccuracies or omissions in these materials. 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.

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