Compression of volatility leads to hypervolatility
Over the next 48 hours, we may see large moves in FX.
At present we have a compression of volatility (see currency strength chart).
This suggests that volatility will increase over the next day or so.
The trade here is:
Trade in the direction of price action and hold the trade.
A trend following strategy will work better than a mean reversion approach.
At present we have a compression of volatility (see currency strength chart).
This suggests that volatility will increase over the next day or so.
The trade here is:
Trade in the direction of price action and hold the trade.
A trend following strategy will work better than a mean reversion approach.