Volatility helps to understand behavior of foreign currency market that has no definite indicators of future rates changes. Markets tend to switch from high volatility to low. These changes usually lead to considerable trading opportunities.

Some forex trading indicators are: recent (increasing or decreasing) market trend, opening or closing of specific rates bars or position of rates close to levels of support or resistance. They help define foreign currency trading market directions after volatility rise.

Finding bars with wide range – larger rates bars than of the previous ones – is a simple way to define rising volatility. Yet, it’s essential to use objective criteria for analysis only. For example, it’s possible to calculate last ten days average range and find a wide-range day as a bar that is at least 50% higher than the average meaning.

We have studied daily forex currency exchange rates rates data of three stock funds: ETF – “Spiders”, SPY, “Cubes”, QQQQ, “Diamonds”, DIA – that pretend to be behaving as которые имитируют поведение S&P 500, Nasdaq 100 and Dow Jones industrial average in order to investigate two weeks’ behavior of these instruments. We studied these forex foreign exchange rate two weeks period that followed wide range days.

We carried out several tests in order to learn if the rate of forex behavior changed after wide-range days that were closing with exceptionally high results of the daily range. The formula show how closing rates and days with high or low levels on the closing moment were calculated.

Indicator for forex formula as follows. In this analysis each day range was ranked according to ranges of the previous 60 days. In order to be perceived as a day with a wide range the day was meant to be 80% higher than the previous 60 days, i.e. the range should be in the 80th percentile in this period. For example, 10th March 2008 daily range SPY and percentile range constituted, i.e. it was higher than 87% previous 60 bars.