Reversal Trading in Forex
Some great reversal trading examples from our London forex webinar.
00:10
Introduction and CAD/JPY reversal setup
00:10
The speaker adjusts the screen and chat box while inviting viewers to ask questions via email. They then resume discussing the CAD/JPY currency pair, focusing on a reversal pattern visible on the three-minute chart. The speaker explains their preference for trading reversals at market tops and bottoms to enter positions early, noting that the CAD is starting to decline as the yen strengthens. They highlight the setup for a potential reversal on the chart.
01:12
Scalping vs slower trading timeframes
01:12
The segment discusses different trading strategies based on timeframe preferences. It highlights the distinction between scalping, which involves very fast trades on short timeframes like seconds, and trading on slightly longer timeframes such as 5 or 15 minutes. Scalping typically requires trading larger sizes to compensate for smaller price movements, focusing on capturing small gains over short periods. The speaker emphasizes that choosing the right timeframe depends on the trader’s comfort and style, and scalping is presented as a valid and effective approach.
02:11
Choosing pairs with tight spreads for scalping
02:11
The speaker discusses a trading strategy focusing on pairs with tight spreads, highlighting that moving from 73 to 68 is a decent improvement. They caution that this approach only works with certain currency pairs because pairs with wide spreads (like four or five pips) create too much disadvantage, making it difficult to recover costs and profit. The choice of broker also matters since some offer tighter spreads across many pairs, which is essential for this strategy to succeed. The segment ends noting positive volume and a trend monitor signal.
03:09
Volume and trend indicators for reversals
03:09
The speaker describes a trading scenario where the color indicators shifted from darker blue, suggesting a possible reversal, back to red, indicating a positive trend for short-side trading. They mention holding this position as an intraday scalping trader. The speaker also references annotated examples of reversals used in various contexts to explain these market movements.
03:37
Example: Non-farm payroll trap move
03:37
The segment explains a typical trap move observed during a non-farm payroll release. Initially, the data release triggers high volatility and a sharp move in the E-mini futures contract (NQ), causing many traders to jump in out of fear of missing out. However, this initial drop is a trap, as the cash markets open an hour later and move in the opposite direction with strong buying activity, ultimately pushing the price back above the original level by the end of the day.
04:42
European session crossover reversal example
04:42
The speaker explains how market makers aim to profit themselves rather than the traders, illustrating this with a 15-minute chart of the Japanese yen. They describe a session crossover reversal occurring around the European market open at 7:00 UK time, highlighting a significant move with high volatility and volume, characterized by a strong downward candle followed by a large upper wick.
05:13
Dow 5-minute volume reversal trade
05:13
The segment discusses market movements focusing on a southward trend and how traders reacted to expectations of a rising market that instead reversed sharply. It reviews specific market data from US markets, particularly the Dow on a 5-minute chart, highlighting a volume reversal pattern. The analysis emphasizes the importance of volume in confirming market reversals, noting an anomaly where a large volume appeared under a candle with a narrow spread and lower wicks, signaling a classic volume-price reversal. This insight demonstrates a straightforward and effective trading opportunity resulting in significant gains.
06:09
Aussie Yen volatility trap example
06:09
The segment discusses a volatility trap observed in the Aussie Yen on a 10-minute chart, where a volatility trigger leads to a doji candle indicating indecision before the price moves sharply upwards, causing many traders to get stopped out or incur losses. It then introduces another example on the 5-minute YM chart, noting the difficulty in tracking exact days, and mentions a significant event at 1:30 related to a fundamental news release from the UK/US that impacted price movements.
07:17
US news release and buyer follow-through
07:17
The speaker discusses a volatility follow-through event where buyers stepped in, causing an upward price movement. They explain the choice traders face between trading reversals or jumping on trends once they are established. The session is wrapping up after just over an hour, with the speaker addressing final questions. They also mention the Forex education program available at quantumtradingeducation.com, which covers comprehensive trading knowledge.
08:25
Quantum Trading education program overview
08:25
This segment introduces a comprehensive trading education program focusing on fundamental and technical aspects of Forex trading. It offers a wide range of resources including live-recorded webinars, trading tools, and indicators. Students gain access to a supportive private members’ group where instructors are actively involved. The course covers multiple trading strategies, including reversal trading, aiming to build confidence and enable traders to choose the approach that suits them best. Additional materials such as books and software are available through the program’s website.
09:51
Trading platforms: TradeStation and Interactive Brokers
09:51
The speaker discusses the development progress of TradeStation integration, mentioning two versions: 9.5, a partnership with Interactive Brokers that combines TradeStation’s advanced charting tools with Interactive Brokers’ discount brokerage, allowing seamless trading through the interface; and version 10, featuring TradeStation Securities with enhanced features like the radar screen and numerous indicators, with plans to develop additional indicators. Contact information is provided for further inquiries or support.
11:11
Closing remarks and contact information
11:11
The speaker expresses gratitude for the audience’s participation and invites them to join the next session on Thursday at 5:15. They wish everyone a good trading day and week ahead, encouraging safety and well-being during challenging times.
By Anna Coulling – creator of volume price analysis
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