The FX Heatmap is a visual representation of the trendiness of a certain currency or currency pair. It shows how far a price has moved from the last extremum (maximum or minimum) for different thresholds ranging from 0.02% to 5%. A red color indicates a down move, a blue color indicates an up move, where the intensity of the color signifies the strength of the move.

When a price turns its direction from an extremum by a certain threshold (e.g. 1%) we say that the market for this instrument is 'trending' or that it hit a directional change. Every subsequent move of the same threshold (another 1%) is called the n-th overshoot and signifies the strength of the trend. So if from the last maximum, the price has dropped by 5%, this is a trend of strength 4 (1 for the directional change and 4 overshoots).

We believe, that one needs to look at markets in event based time. The event based clocked ticks as soon as the price reverts from an extremum by a certain threshold. When this happens, we call this a directional change (DC). The price move that happens until the price turns again from the next extremum is called the overshoot. The overshoot is an indicator of the balance of supply and demand. The longer the overshoot, the higher the imbalance in the market (for the threshold at hand). Opening a counter-trend position (or closing a trend position) at certain values of an overshoot can result in profitable trading strategies.

Red color means a trend down, a blue color means a trend up. The more intense the color, the stronger the move.

If you click on the heatmap, you can see the price evolution for the clicked threshold. The picture shows you, where the price curve hit its last extremum (EXT), where the directional change (DC) happened and - if already moved that far - where the overshoots (OS) were triggered. On the right side you can see the prices that will trigger a) the next directional change and b) the next overshoot. Additionally you can see the current price.

If you click on the + sign in the top right corner, you can see all the currencies which you can choose from. Clicking the - sign closes the window. Per default, the FXX 'currency' is shown: FXX combines the most important currency pairs and gives a quick overview on volatility, trend and spot rate.

Checking this option adds green bars to the FX Heatmap, that indicate the five FX Signal thresholds.

The more often you click on the refresh bar at the top of the page, the quicker reloads happen.

You'd like to share a snapshot of the FX Heatmap? Use the permalink; it will show you previous FX Heatmap snapshots.

You can observe waves that start at the very lowest threshold propagating to higher thresholds or how waves spread across different instruments.

The trend number is the signed sum of all overshoots for an instrument; this results in a basic indicator of the current trend. The vol number (volatility) is the unsigned sum of all overshoots for an instrument; this results in a basic indicator of the current volatility. Obviously, both measures mix long and short term moves.

Spot rates are inverted if necessary. This means that all data in the heatmap is measured with the main currency on top. For instance, EURUSD will be depicted as USDEUR if you look at the USD heatmap.