Most currency pairs are moving within ranges or sideways pattern. Some have been doing it for months already, others just for September or part of September.
It isn’t just currencies either. Crude oil has moved sideways through September, and while gold and silver have seen some nice swings in the last couple months ultimately they are moving sideways too. In other words, a sustainable trend is hard to find in this sort of environment.
The EURUSD price range has been narrowing since the August 24 spike, and has moved into a tighter consolidation since September 23. The AUDUSD also stopped trending about September 23. The GBPUSD is still in its short-term downtrend, but is very choppy as it rides longer-term support.
The USDJPY is in a narrowing range since late August, and since early September the USDCHF hasn’t been able to gain traction in either direction. Same goes for the NZDUSD, EURCHF, EURNZD, EURCAD, GBPAUD and GBPCAD to list a few more.
There are a few exceptions. The USDCAD has continued to trend, but only after an extended sideways period in late August and early September. The USDMXN was choppy through early September but has seen more trending price action since.
In this sort of environment it can be tough to trade. The moves don’t follow through, which means trailing stops are likely going to get triggered before targets are reached, resulting in small losses and profits.
The question becomes…should a person even trade during such times? Traders should trade when their trading plan dictates, but if conditions are not ideal for your strategy–for example a trending strategy–then each trade should undergo more scrutiny.
There are still good trades out there, but in a choppy environment realize they may not work out. The forex trading signal in the AUDNZD from September 29/30 is a good example of this. The trade set up well and even though the price was moving in a large range there was ample room for the trade to produce a profit. Unfortunately, because of the choppy environment the pair continued to gyrate around the entry price, eventually resulting in the trade being trailed out flat.
When conditions aren’t ideal (for your strategy) consider staying on the sidelines until they are. Reduce your trade frequency if conditions are resulting in poor trading results. This will allow you to preserve capital so you can capitalize when conditions are favorable for your strategy.
Through September, and mostly late September, many swing traders I have spoken with have struggled. Following some big moves in late August many markets have done nothing, which has means stagnant profits or accumulating losses. If a trend trader, it is alright to wait for a trend to develop. There is no need to try to be the first one in for the next big move. Trying to do so is very costly if this choppy price action continues for an extended period of time.
Another option is to focus on what IS working. Day trading in the EURUSD has been quite good this month, despite the choppy movement on longer-term charts. Only consider this if you have a viable method for day trading though.
USD non-farm payrolls on Friday is a high impact event which may give some of these pairs they boost they need to breakout.