Forex Blog

How To Read And Take Advantage Of The Forex Heatmap

January 31, 2024 | 1:27 pm | Forex Blog
January 31, 2024 | 1:27 pm
Forex Blog
How To Read And Take Advantage Of The Forex Heatmap

Forex Market Volatility and Price Movement

Traders need volatility and price movement to profit from their directional trades. This includes day trades or trade entries into the trend. Forex traders can use visual tools like the Forex Heatmap® to see and scan 8 currencies and 28 pairs within 60 seconds to locate strong momentum and the best opportunities for entering new trades, day after day and week after week.


Daily Market Sentiment, Forex News Drivers

Every trading day, the forex market is subject to the overall sentiment of the equity markets, commodity markets, and economic news announcements on the forex news calendar.

heatmap - Forex News Drivers

When the market volatility and momentum hit in the main trading session, sometimes after a news driver, that is always a good time to consider a trade. Look at the example below.

heatmap - price drop

forex heatmap pairs

On this day in the main trading session, the heatmap indicated the CHF to be consistently strong. This is a good time to trade the forex market. You can also set up your charts using the Meta Trader profiles with all 7 CHF pairs on one screen. This is a phenomenal trend indicator chart and live indicators setup geared towards trading success. On this trading day you could have sold the EUR/CHF or possibly the AUD/CHF to get a profitable trade.  Then, if these pairs are trending down on the higher time frames, possibly get ready to make more trend-based pips over the next few days as a swing or trend trader. This example is for the CHF pairs, but the heatmap works the same way for 8 currencies and 28 pairs.

Discussion of JPY, CAD, And AUD Pairs Market Correlations

Forex markets are correlated to other financial markets. The JPY is tied to equity markets; the CAD is tied to the oil market, and the AUD is tied to the gold market. If the equity markets are moving and S and P futures are up or down strongly, always check the JPY pairs for strong momentum.

forex heatmap - currency pairs

When The Japanese Yen JPY is weak, and equity markets and S and P futures are up, this is a great day to buy the JPY pairs. The opposite is also true when the JPY is strong. Equity markets and the JPY pairs also can react to unexpected news events across the world. However, you can capture these movements with the proper alert systems like push alerts to your desktop and cellphone.

Forex traders should know that the Gold and Oil markets (commodities) can be tracked with commodity-based currencies, like AUD, CAD, and NZD. When the commodities are moving, and the commodity-based currencies are moving, that is also a good day to look to trade the forex market.

In this example, the CAD is strengthening across all major currencies. If the price of oil is also moving higher, this is a great day to trade. Volatility, price movement, and clear signals. The live signals for the CAD pairs can also be used to trade commodities like oil directly.


Strong Clear Signals and Volatility

When the market is volatile many pairs and currencies will be moving, it will be easy to see with a visual map of the market inside of 60 seconds. Similarly, if the market is not moving and has low or no volatility, it will be easy to see. If the market has high volatility, you should be able to trade the pairs with consistent heatmap signals on any of the top 8 most liquid currencies tracked by the heatmap.

If there is only one currency moving but the volatile is news driven, the trading is still okay in most cases. So if the JPY is weak and there was JPY news driving the movement then trading during that trading session is much safer.


Low Volatility Trading Days, Quiet/Consolidating Market – Do Not Trade

Knowing when NOT to trade is also very important. If the market is quiet and consolidating with no volatility, forex traders must “sit on their hands” and not enter new trades. Without volatility and price movement, there are no pips to be made. Check the forex heatmap and know when there is no market volatility in under 60 seconds.

Forex Heatmap Chart

Look at this portion of The Forex Heatmap®. It indicates very low volatility and price movement on two of the 8 currencies we track. If the volatility is low on nearly all the market it is not a good day to trade. Volatility and price movement are necessary to enter trades and make pips.


Trend, Momentum, and Price Targets

If the market is volatile or after certain volatile news drivers on the forex news calendar, we feel as if making pips is always possible using a heatmap if there is consistent directional movement on at least one currency. If any currency pair is trending and that pair has momentum on the heatmap in the direction of the trend, we feel as if most traders can almost always make pips in that situation.



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