Vantage FX (www.vantagefx.co.uk) look at off-chart indicators and how they can assist with your trading.<br /><br />Off-Chart Indicators<br /><br />Today we are looking at a one-hourly AUD front month futures contract for December, in Chicago time.<br /><br />By examining the observed volatility from one closing price to the next, we can see that on 16 October it was fairly subdued, running at the 6% mark. However the observed volatility suddenly picks up on 17 October to 13.5% because of the market move, then it comes down again.<br /><br />Today it's at its highest level in almost a week - we've gone up to 19.5% because there is a spike followed by a reverse. Be sure to look at the price action carefully for spikes. We have drawn a pink line for implied volatility on a one month at the money put, and below that is the implied volatility at the money call (these are cash prices). We can see that there is a consistent skew - traders tend to prefer the puts over the calls (ie. selling rather than buying AUD).<br /><br />We have plotted a histogram to show the volume within the hour along with a ten period moving average of the volume itself. Below that is the RSI, which can remain overbought for rather a long time before it goes under again. It is now almost oversold so look out for signs of basing.
