A powerful application of volume price analysis

A powerful application of volume price analysis

In this video, we explain how to use volume price analysis to help identify changes in trend and whether the trend is setting up for a true reversal or simply pausing and moving into congestion or a pullback. This is one of the most powerful applications of volume price analysis as it will help you to stay in the trend to maximise your profits and not exit early on an emotional reaciton to take your profits off the table.

00:12

Introduction and microphone setup

00:12

The speaker greets the audience and confirms the microphone is working properly. They adjust the audio levels and introduce the setup, mentioning they are using a multiple time frame workspace displaying 15-second, one-minute, and three-minute intervals.

00:47

Cable and dollar strength analysis

00:47

The speaker discusses recent market movements, focusing on the pound’s decline against a strong dollar. The analysis is based on a five-minute chart showing a significant downward trend in the pound. The trend monitor indicates a solid red signal on shorter time frames, confirming the strength of the move. The volume point of control is mentioned as a key level being broken with decent volume, highlighting the robustness of the current trend. The speaker emphasizes that cable (GBP/USD) presents one of the best trading opportunities at this time.

01:53

NinjaTrader local time advantage

01:53

The speaker discusses the challenges of using MT4 and MT5 platforms due to their time settings being typically two hours off from local time, which complicates analyzing session crossovers, news releases, and price actions. In contrast, NinjaTrader displays data in local time, making it easier to interpret. The example given is the London open at 8:00 local time, where significant volume appears but without strong immediate movement. The focus then shifts to monitoring support and resistance levels and observing the development of volume point of control to identify potential price breakaways.

02:48

Volume point of control and support levels

02:48

The accumulation distribution indicator on NinjaTrader highlights heavy volume areas by building levels and channels that act as support or resistance. These levels indicate likely breakaway points and protective barriers, especially after multiple tests. For breakaway trading strategies, patience is crucial to allow congestion to form and then break away, with volume confirmation providing strong signals for entry and exit points.

03:45

Breakaway trading tactics explained

03:45

The discussion focuses on identifying key price regions for placing stop losses based on risk management and volume profiles. The price is expected to move swiftly through a low volume node, with congestion building around a certain area as volume increases. The volume point of control indicates lightweight volume in lower regions. Analyzing different time frames from the volume histogram and trend monitor, the move is still developing. Notably, the London open volume at 8:00 is relatively modest, which is unusual since that period typically sees a surge in trading volume.

04:46

Trend monitor and volume observations

04:46

The discussion focuses on comparative trading volumes around the European open, with an unexpected larger volume increase occurring in the second candle rather than the first. The market shows signs of a bearish move as indicated by the trend monitor turning red. On the five-minute chart, the dollar is nearing an overbought region, while the pound is also approaching significant levels. The speaker notes benchmarks around the 1820 level as reference points for potential overbought or oversold conditions, emphasizing that prices may reverse before reaching these extremes.

05:44

Overbought and oversold currency levels

05:44

The speaker explains that when a currency reaches an oversold or overbought condition, it should not be interpreted as a definite reversal point. Instead, it serves as a benchmark indicating the currency’s current position in its overall movement. They then refer to the Dollar and the currency majors matrix as tools to analyze the situation, mentioning ‘cable’ as an example.

06:17

Dollar strength across currency majors

06:17

The speaker reviews various dollar pairs including the Canadian dollar, Australian dollar, Euro dollar, Swiss dollar, and New Zealand dollar, noting the absence of the dollar-yen in the current view. They observe a near-universal trend of buying the US dollar across these pairs, with the dollar gaining strength particularly against the Canadian and Swiss dollars. The market shows consistent buying of the dollar, reflected in similar upward trends across these currency pairs, although the Euro dollar is an exception, showing a bearish movement.

07:14

The focus shifts to the importance of identifying currencies that are simultaneously showing strong strength and weakness, as these combinations create the most powerful trends. The speaker explains that trends develop when one currency rises strongly while another falls sharply, driving momentum through opposing forces. This concept is illustrated through the example of the cable (GBP/USD) pair and broadly applies to the current currency market dynamics.

07:39

Currency strength and trend formation

07:39

The current strength in the euro-dollar pair is driven not by the euro weakening but by the dollar strengthening. When analyzing currency strength indexes (CSI), a strong trend emerges when one currency rises sharply while the other falls equally sharply. If both currencies move in the same direction, such as the dollar and yen both rising, a strong trend in the pair is unlikely.

08:37

Currency pairs moving in same direction

08:37

The speaker explains that when two currencies move in the same direction but at slightly different speeds, their price action tends to consolidate rather than form a clear trend. This is likened to two trains traveling side by side at different speeds. A trend in the dollar-yen pair would only emerge if one currency reverses direction while the other continues, such as the yen rising while the dollar falls. The conversation then shifts to discussing an example involving the British pound.

09:35

Trading focus by currency and time zone

09:35

The speaker advises new traders to focus on one currency initially, considering the trading time zone to choose currencies that are actively traded during that period. For instance, in the UK, the euro and pound are more active. Traders should select pairs involving their chosen currency and observe current market conditions. The example given highlights the British pound’s recent sell-off, particularly against the Australian dollar, and emphasizes looking for divergences and potential reversal opportunities in trades such as the cable (GBP/USD) pair.

10:47

Pound divergence and pair analysis

10:47

The speaker discusses analyzing pullbacks and trend reversals using currency charts, focusing on the British pound’s movements against various currencies. They highlight that the pound is being sold, though less strongly against the yen compared to the dollar. The discussion includes observing divergences with the Canadian dollar and New Zealand dollar, noting the importance of monitoring multiple currency pairs. The speaker mentions awaiting movement from the Australian dollar to identify further divergences and advises against trading pound-square pairs due to their similar movements. Finally, they introduce an alert tool available on multiple trading platforms that helps track these movements on a 10-minute chart.

12:19

Camarilla levels and indicator resources

12:19

The discussion focuses on the importance of the Cramer cross as a potential indicator of price reversal or resumption in trading. The speaker explains that missing the initial move may result in consolidation, and ultimately the chart will reveal if a resumption or reversal occurs. The 10-minute chart highlights significant levels, specifically the R3 resistance level.

12:49

Further attention is given to key levels such as R3 and R4, which are important in trading strategies. Viewers are directed to quantumtrading.com for detailed explanations and videos on how to use these indicators effectively. David has produced numerous helpful videos on the Quantum Trading YouTube channel, especially in preparation for TradeStation, providing in-depth examples and guidance.

13:23

David confirms creating around five to seven videos focused on Camarilla indicators, among a total of 70 to 80 videos covering various trading indicators. These indicators can be integrated with volume price analysis (VPA) and incorporated into personalized trading strategies. The current lack of divergence is attributed to the price remaining near the R3 level, as seen on the three-minute chart.

13:53

The conversation shifts to the volume point of control and the absence of a clear market bias at this time. The Pound-Aussie currency pair is noted for its slower movement after the London market opens, a characteristic familiar to the speaker from extensive experience. Unlike the British pound (Cable), which moves quickly after the London open, the Pound-Aussie often begins moving later, sometimes only halfway through the session.

14:25

Currency characteristics and patience

14:25

The speaker explains the typical price movement pattern after the London market opens, highlighting a strong move followed by consolidation and then another move during the US afternoon session. They emphasize the importance of becoming familiar with currency pairs through observation, particularly focusing on volume points of control, and stress the need for patience in trading using Renko charts.

14:58

Renko charts for trade confidence

14:58

The speaker discusses the importance of Renko charts in volatile markets, highlighting how they smooth out price action and provide clearer signals for entering and exiting trades. After a congestion phase, the Renko chart showed a strong trend with pullbacks that maintained bullish confirmation, giving traders confidence to stay in their positions. The chart also indicated a potential reversal when price repeatedly failed to break through the R4 resistance level multiple times, suggesting a likely downward move.

16:07

The speaker explains that repeated failed attempts to break a significant resistance level on the Renko chart often signal that the price will not push higher, advising traders to close positions and prepare for a downside move. The current Renko trend monitor shows fluctuating signals, hinting at a potential decline consistent with the selling pressure on the pound, but emphasizes the need for patience and confirmation before acting.

16:42

Pound Aussie patience and confirmation

16:42

The discussion focuses on the Pound-Aussie currency pair, emphasizing patience and careful observation of the volume point of control (VPOC). The current daily candle is an up candle moving toward the VPOC, suggesting potential upside movement. The speaker highlights the importance of watching how the daily candle develops this week to decide the next direction.

17:47

The analysis continues by comparing price action on the 10-minute chart with the Renko chart, illustrating how volume price analysis (VPA) and Renko charts together build confidence in trading decisions. Key patterns such as congestion, breakouts, minor pullbacks, and reversals (shooting star and anomalous candles) are identified, helping traders decide when to enter, stay in, or exit trades. The segment concludes with a reminder to consider when not to trade.

19:02

Futures workspace and currency futures

19:02

The speaker explains how futures contracts for various currency pairs are quoted against the US dollar, which sometimes requires inverting rates for alignment with spot prices. They highlight pairs including the Aussie dollar (6a), cable (6b), and CAD dollar (6c), noting that all currency pairs generally move in the same direction depending on whether the dollar is being bought or sold. Additionally, the futures market offers a unique perspective on volume and price analysis.

20:12

The discussion focuses on the close relationship between futures and spot markets, which move toward comparable prices as futures contracts near expiration, though they may diverge beforehand. Attention is drawn to the euro dollar as a particularly interesting pair at the moment, with other currency movements showing signs of weakness as the US dollar strengthens.

20:46

Euro dollar volume and price action

20:46

The speaker analyzes the currency market, highlighting that the British pound (cable) is moving from overbought to oversold conditions, while the Swiss franc and New Zealand dollar show signs of rolling. The euro is experiencing strong buying pressure, with increasing volume under specific candles signaling buying interest. However, the volume supporting the rally is starting to decline, raising questions about the rally’s sustainability. The discussion focuses on volume nodes and resistance, indicating that moving through low volume areas requires less effort, which is significant for trading decisions on a five-minute chart.

22:12

The volume point of control acts as a market pivot, creating strong support and resistance zones that define price ceilings and floors. Breaking these zones can lead to significant resistance or support shifts, which is crucial for setting stop losses. Volume-based support and resistance complement price-based levels. Despite a warning signal from falling volume, considerable buying volume beneath certain candles creates anomalies that suggest potential underlying strength in the market, as explained through Wyckoff methodology.

23:12

Volume price analysis candle interpretation

23:12

The speaker explains that the current candle pattern indicates buying activity rather than selling, as the candle closes with an upward body and a deep wick. The volume supports this interpretation despite a rally that appears weak due to declining volume. The discussion highlights the importance of Volume Price Analysis (VPA) applied to groups of candles and single candle volume in understanding market trends, particularly the transition between primary and secondary trends.

24:10

The speaker emphasizes that traders often struggle not because of lack of knowledge or capital, but because they cannot hold positions through inevitable pullbacks and reversals during trend shifts. The effective use of VPA helps identify these moments when primary trends pause or reverse temporarily, enabling better decision-making about when to close positions.

24:39

Holding trades through pullbacks

24:39

The speaker explains the difficulty of trading by highlighting the challenge of managing losses versus wins. Traders often face more losing trades than winning ones, so the winning trades must be significantly larger to compensate. For example, with multiple small losses, the profits on fewer winning trades need to be substantial to maintain overall profitability. This requires patience and discipline to hold positions longer and aim for bigger gains. Volume Price Analysis (VPA) is introduced as a tool that helps traders differentiate between a full market sentiment reversal and a temporary pullback within a trend, aiding in better decision-making about whether a bearish trend is ending or just pausing before continuing.

26:10

Currency strength and trend rollovers

26:10

The segment discusses the currency strength dynamics, highlighting that the euro is still buying while the dollar is beginning to weaken. This combined movement supports the current trade trend. However, volume is decreasing despite rising prices, which is unusual and suggests the trend may not sustain. The speaker also references the VIX to indicate market sentiment, noting that indices have been selling off since the market opened.

27:03

VIX volatility and market risk sentiment

27:03

The video discusses recent market activity focusing on the YM, NQ, and ES indices, highlighting a significant surge in the Nasdaq with decent volume. The VIX volatility index is trading high at 25.8, indicating elevated market uncertainty and risk-off sentiment. This elevated VIX level is attributed to the upcoming U.S. presidential election, which the market expects to be contentious and possibly disputed, causing sustained demand for volatility despite recent market rallies. The VIX remains far above typical levels around 10-12, reflecting ongoing investor caution and anticipation of election-related turmoil.

29:22

Currency strength indices overview

29:22

The segment explains how to use currency strength multiples across different time frames—one, five, ten, and fifteen minutes—to get a comprehensive view of currency trends. It emphasizes identifying whether a trend is continuing or reversing by analyzing these time frames together.

29:50

The euro, which was previously oversold, is now showing signs of buying strength across multiple time frames, especially on the ten and fifteen-minute charts. The one-minute chart shows developing buying momentum that is beginning to stabilize, illustrating how fast time frames reflect ongoing market movements.

30:18

Traders using longer time frames, like the ten-minute chart, may perceive short-term pauses or pullbacks differently than those on shorter frames. The combination of currency strength indicators and volume price analysis (VPA) helps distinguish between a brief pullback and a full trend reversal.

30:46

Currently, buying momentum for the euro is developing consistently across multiple time horizons, while the US dollar is weakening across these same frames. This presents potential scalping opportunities in currency pairs such as the Australian dollar and Canadian dollar against the US dollar.

31:10

The yen is moving in alignment with the euro and dollar, indicating no strong trend there. The dollar shows signs of flattening and pausing on the longer time frames. For a sustained euro trade, traders should look for continued euro buying and stronger dollar selling to confirm the trend.

31:36

Using CSI for trade entries and exits

31:36

The speaker explains that the CSI tool is valuable not only for identifying entry points in trading but also for managing positions effectively. By observing how the currency pair moves—whether trending, flattening, or rolling over in faster time frames—traders can decide when to stay in or exit a trade. The importance of volume and trend indicators across different time frames, such as Renko charts, is emphasized for comprehensive market analysis. Additionally, the currency arrays provide a clear visual representation of trend strength and overall market sentiment for specific currency pairs.

32:28

Currency arrays and overbought signals

32:28

The segment explains a ranking system used to assess currency pairs’ conditions, highlighting visual indicators for overbought or oversold states. When a currency pair nears an oversold condition, it is shown in brackets with a darker color, while an overbought or oversold state is marked by brighter blue colors and removal of brackets. The speaker notes that the trend is beginning to weaken, with the pound/New Zealand dollar pair showing strength initially but then weakening over the last 5 to 20 minutes. A feature to isolate the pound for focused analysis is also demonstrated.

33:27

Pound related pairs and divergence

33:27

The discussion focuses on analyzing the pound and its related currency pairs, particularly the euro-pound and pound-Swiss franc pairs. Ideally, when selling the pound, the euro-pound should rise and the pound-Swiss should fall, indicating divergence. However, reviewing short-term price action on one and five-minute charts shows that the pound and Swiss franc are moving together, resulting in no strong trend or significant divergence. The pound-Swiss pair is positioned mid-table with little trading opportunity, as it is deeply oversold and lacks clear directional momentum in the short five-minute timeframe.

34:59

Trading tops and bottoms strategies

34:59

The speaker explains that whether you choose to trade early reversals or follow the trend once it is established, focusing on tops and bottoms is crucial. These points offer the greatest potential for price movement and successful trades. The segment concludes with an apology for going over time and a note on where to find additional resources.

35:27

Quantum Trading education program overview

35:27

The speaker introduces the Quantum Trading platform, which supports various indicators across multiple platforms such as MetaTrader 45, NinjaTrader 78, TradingView, and TradeStation. It will be launched this month and integrates with Interactive Brokers and TradeStation Securities. The platform includes a powerful radar screen and plans for separate webinars to demonstrate new features.

36:22

They explain the capability to port indicators to TradingView using Pine Script, which now supports object and line drawing. Users with a full TradingView package will receive these indicators for free, with pricing expected to increase once the porting is complete, aligning with MetaTrader 45’s pricing.

36:50

The Quantum Trading education program is detailed, covering five core modules: psychology, fundamental, relational, technical, and trading mechanics. The program consists of over 430 lessons and 200-250 hours of video content, including 13 PDF downloads. Students also gain access to the VPA room and the full suite of indicators. The speaker emphasizes the extensive effort and pride put into creating this comprehensive forex trading program over two years.

37:48

Closing remarks and upcoming sessions

37:48

The speaker directs viewers to annacooling.com for market analysis, blog posts, and book links available on Amazon. They mention taking a break to walk their dog and have coffee, then invite viewers to enjoy the rest of the trading day. They plan to return at 3 PM UK time for the US futures and forex session, thanking the audience and promising to be back next week at the usual time.

By Anna Coulling – creator of volume price analysis