A quiet start to the forex session as London opens with tepid sentiment

A quiet start to the forex session as London opens with tepid sentiment and markets move sideways with only the US dollar showing some signs of life.

 

00:01

Webinar introduction and disclaimer

00:01

The webinar begins with a welcome message and introduction. The hosts express gratitude to the audience for joining and outline the plan to review forex charts and discuss current trends in the forex and broader markets. They also remind viewers to note the trading disclaimer displayed on the screen, emphasizing the risks involved in trading.

00:33

Overview of 3D forex chart analysis

00:33

The speaker emphasizes the risks involved in trading and advises against using money one cannot afford to lose. They introduce a three-dimensional approach to chart analysis, focusing on price action and volume through a methodology called volume price analysis. This approach also incorporates support and resistance levels, candle patterns, and multiple time frames, including non-time-based charts, particularly for faster trading scenarios. The method applies broadly across forex and other markets.

01:33

Fundamental factors and Brexit impact

01:33

The speaker discusses the importance of the current week for the euro, highlighting how Brexit narratives mostly focus on the British pound rather than the euro. They note that while Brexit has generally had a negative impact on the pound, recent developments have shown a slight change, especially concerning the euro-pound currency pair, which is very sensitive to Brexit-related events.

02:36

The discussion expands to include how the euro is influenced not just by Brexit but also by broader market sentiment reflected in equities, commodities, and bonds. The speaker explains that market sentiment indicates the willingness to take risks and that currency markets react strongly to these changes. They emphasize that markets are not sentimental but respond quickly and brutally to shifting conditions, particularly in political contexts like Brexit. Understanding the interrelationships within and between markets can help anticipate these movements.

04:16

Complete forex trading program details

04:16

The speaker explains that the foundational materials, including books and box sets featuring worked examples of the VPA methodology, are available on Amazon. From these resources, they developed a comprehensive forex trading program that expands beyond the methodology to cover all essential elements for becoming a successful and consistent forex trader. Recently, they introduced a funded forex program option for those who have taken or plan to take the program, allowing participants to trade with provided funds instead of their own money.

05:26

The funded forex program is a tiered, no-risk opportunity starting with an evaluation phase where traders can begin with $5,000, $10,000, or $15,000. Successful completion of this phase results in the initial amount being quadrupled. From there, traders can increase their capital allocation up to $2 million. There is a one-time entry cost at the evaluation stage, and the program has proven successful for current participants.

06:30

Funded forex program explained

06:30

The speaker explains that after an initial payment, no further fees are required; the goal is to trade up to two million. They then transition to discussing the day’s agenda, mentioning they have financial news to share and suggest considering a particular financial tool or service.

07:05

Using financial calendars for news

07:05

The speaker discusses the advantages of using the Forex Factory economic calendar, highlighting its user-friendly interface and informative features. It provides details on economic releases, such as the ZEW report for Germany, including background information, related articles, and a small chart that helps users interpret the data. The calendar allows traders to read fundamental news similarly to reading a chart, identifying trends and sentiment changes.

08:12

The ZEW report is emphasized as an important economic release because Germany is a key economy in the EU. The report reflects sentiment trends, including the ongoing impact of the pandemic in Europe. The speaker notes the interconnectedness of economies, comparing the influence of the US economy to Europe’s. Additionally, the speaker explains the benefit of having a parallel economic calendar, mentioning the pro version of Financial Juice that offers real-time updates and highlights high-impact releases in red, classified as tier one events.

09:26

The speaker compares the approach of Financial Juice and Forex Factory in classifying the impact of economic news. Financial Juice tends to mark more events as high impact and sometimes includes releases not found on Forex Factory. While not criticizing Forex Factory, the speaker appreciates having both calendars to balance information. The segment concludes by reaffirming the importance of the ZEW release and encourages understanding it as a crucial indicator for the day.

10:36

Euro and Brexit market sentiment

10:36

The sentiment in Europe is declining, which is concerning for the region’s economic outlook. The usual market reactions to Brexit—where the euro rises and the pound falls—were disrupted recently. This week is important for Europe, with the European Central Bank meeting upcoming and the German economy showing signs of weakness.

11:13

The broader European economy appears weak, and an EU summit is approaching amidst uncertainty about the recovery plan. Poland and Hungary are threatening to veto the plan due to attached political conditions, complicating consensus in the EU’s collective decision-making process.

11:47

The political disagreements in Europe over the recovery plan highlight underlying tensions, as unanimity is required for approval. Despite past crises, solutions have typically been found to maintain the euro, which remains a politically-driven currency.

12:20

The euro has faced many predicted declines, but its political nature has allowed it to endure. Market data from the Commodity Futures Trading Commission (CFTC) shows that long positions on the euro remain robust, suggesting bullish sentiment despite ongoing uncertainties.

12:56

Although euro longs have decreased from August highs, the futures market still reflects a relatively positive outlook. The market is cautious but not dramatically bearish, indicating some resilience in the euro amid political and economic challenges.

13:34

Analysis of the options market reveals rising implied volatility for the British pound, signaling increased market uncertainty likely tied to Brexit developments. The volatility indicators for the pound have risen from the previous week, suggesting expectations of forthcoming price swings.

14:08

The overnight implied volatility for the pound is expected to be even higher, reinforcing the anticipation of market turbulence due to Brexit. While the pound is expected to face more volatility, the euro has also seen increased implied volatility, reflecting broader market concerns.

14:45

In response to these market dynamics, a series of forex market indicators have been developed to support trading strategies, including the Volume Price Analysis (VPA) methodology. These tools aim to provide deeper insight into currency movements amid uncertain conditions.

15:28

Currency strength and matrix indicators

15:28

The speaker explains currency strength indicators used in forex trading, highlighting that these tools show individual currency movements across multiple time frames and pair strength through a currency matrix. The matrix helps identify which currency pairs are moving most strongly and whether the sentiment is consistent across pairs, using the Canadian dollar as an example.

16:36

The speaker discusses how the currency matrix ranks pairs by overall strength and weakness, showing the consistency of buying or selling within a currency’s pairs. This ranking helps traders identify where the strongest buying is occurring, such as against the Canadian dollar or British pound, providing a clearer picture of market sentiment.

17:45

The speaker emphasizes the importance of the indicator’s values on hourly charts, noting that high values indicate strong moves, while low values suggest limited movement. Using the euro-pound pair as an example, strong moves are reflected in values above 100, while low values indicate less attractive trading conditions. This helps traders decide when to avoid or take trades.

18:54

The speaker clarifies that these are technical tools rather than traditional indicators, designed to aid technical analysis by showing market conditions and movement strength. They note that on the hourly chart, currencies are clustered near the center, indicating limited recent movement except for the Canadian dollar, which has made a decent move.

20:00

The hourly chart provides insight into current market behavior, with values suggesting limited price movement and potential containment of moves. The speaker mentions the ability to isolate individual currency pairs to assess their activity, using the British pound as an example, which appears flat or slightly weakening on the hourly timeframe.

21:00

The speaker reviews the consistency of selling pressure on the British pound, particularly against the euro, noting mixed signals on shorter time frames like the 10-minute chart. They introduce a daily chart of the euro-pound pair featuring a large candle with a significant wick from the previous day, illustrating recent volatility and notable price action.

22:04

Euro pound price action analysis

22:04

The segment discusses recent Brexit-related talks that affected the British pound, causing a sharp downward move reflected as nearly 100 pips in the euro-pound exchange rate. The mood shifted in the afternoon leading to a sharp sell-off, highlighting the euro’s vulnerabilities not only from Brexit but also other underlying issues. Upcoming events like the ZW release and the EU summit are noted as important factors for euro traders to watch. The conversation briefly shifts to market activity and trading focus.

23:09

Support and resistance with Camarilla

23:09

The speaker discusses using multiple time frames for trading analysis, including daily, hourly, ten-minute, three-minute, and Renko charts to assist with entries, exits, and trade management. They emphasize the importance of support and resistance levels as a key pillar of volume price analysis. Various technical tools, including proprietary indicators and the camarilla indicator, help identify and prioritize these levels. The camarilla indicator refreshes daily for time frames up to but not including the hourly, highlighting critical levels such as R3 and R4, which are significant for predicting price action.

24:28

The speaker elaborates on the behavior of price around the R3 level, noting repeated failed attempts to break through it, indicating a major reversal point. Volume and volatility candles support this observation. They explain that significant levels like R3 signal expected congestion or reversal when price approaches them, which traders use as targets or reference points. However, rather than assuming automatic reversals at Fibonacci levels, they stress the importance of analyzing price action and volume to understand whether a breakout or reversal will occur.

25:36

The analysis continues with the importance of volume in confirming whether price will break through or reverse at tough levels tested multiple times. Traders should watch for reversal opportunities or shorts if price fails to break through. These levels are also highlighted by the currency strength indicator (CSI), which should be used in combination with other tools for confluence. The speaker then demonstrates how to apply these tools on faster time frames, such as the 15-minute and 5-minute charts, to gain a more detailed understanding of price action and volume dynamics in the current market context.

27:25

Multiple time frame chart analysis

27:25

The speaker analyzes the pound’s downward movement on a five-minute chart, noting congestion indicated by two lines moving in the same direction. They highlight the importance of key resistance levels R3 and R4 within the Camarilla protocol, explaining that surpassing R3 with strong volume could lead to a target at R4. These levels assist in setting price objectives rather than risk ratios.

28:31

Observing the euro’s potential upward turn at the R3 level offers some optimism while the pound continues to weaken. The speaker mentions the ability to move MT5 charts to another screen using a docking feature, which is not available in MT4. They examine the Renko chart, noting the recent upward move with some pullbacks and current resistance, describing the overall trend as sluggish but generally upward.

29:36

The euro-pound pair shows a daily candle with a minor pullback, still indicating a potential move higher if it can break the R3 level on timeframes up to but not including hourly. The speaker explains that multiple timeframes provide different sets of pivot levels, such as weekly and monthly values, which help assess market strength. The hourly chart shows congestion at R3, emphasizing the significance of this resistance.

30:42

On the hourly chart, the two currencies exhibit intertwined movement, causing frustrating congestion and requiring patience. The speaker stresses the importance of monitoring news, especially regarding Brexit developments, which heavily influence currency markets. They note that political negotiations are focused on saving face and securing perceived better deals, affecting market sentiment and price action.

31:47

The speaker concludes the euro analysis, acknowledging the discussion ran longer than expected, and transitions to David who will cover euro-yen. They hope David has observed more significant price movements in his currency pairs.

32:20

Intraday euro trend and volume insights

32:20

The presenter invites questions and explains they are analyzing multiple currency strength indicators on short timeframes, focusing on the euro due to its overbought condition before the London open at 8:00 UK time. They highlight that such session crossovers often present reversal trading opportunities, illustrating this with price action examples, including the dollar showing a similar pattern of movement at the London open.

33:27

Using TradingView charts on various short timeframes, the presenter shows how the euro experienced a general slide before a sharp recovery at the London open, marked by a hammer candle on the 5-minute chart. They note the trend monitor tool helps gauge sentiment and trend direction. The dollar has been relatively strong for 15-25 minutes, while the euro has seen significant selling pressure across pairs such as euro/yen and euro/Aussie.

34:30

The discussion focuses on euro/Aussie and euro/yen pairs, pointing out strong euro selling and yen buying, as well as Aussie’s rally from an oversold state on short timeframes. The presenter highlights the importance of identifying two-bar reversal patterns on different timeframes, which signal potential trend changes, using candle formations with small bodies and long wicks as examples supporting these reversal signals.

35:36

Attention is given to volume analysis around the London open, noting a typical volume spike between 8:00 and 8:30 UK time. The presenter explains the limitation of volume analysis within this tight timeframe but compares it to the prior European session volume from 7:30 to 8:00. The trend monitor’s support of the observed price moves is reaffirmed, illustrating how volume and price action combine to validate trading signals.

36:30

Volume point of control and support

36:30

The price is expected to move quickly through a low volume node near the volume point of control (VPOC), but will then encounter strong resistance due to heavy volume accumulation. There is a cluster of potential support levels just below the current price, but if these break, the price will face significant barriers and likely congestion near the VPOC. Given the limited room for upward movement (around 10 pips), the potential for gains is constrained, and traders should carefully assess whether the risk is justified based on chart conditions rather than preset risk-reward ratios.

38:05

Trading decisions should focus on chart-based evidence of risk and opportunity rather than desired risk-reward targets, as the market acts independently of personal preferences. From the three-minute timeframe, the price is breaking away from the VPOC but is testing a strong support level indicated by the thickness of volume-based lines. These lines represent the strength of support or resistance, increasing in thickness with repeated tests. The trend monitor shows a bearish sentiment currently, suggesting caution as the price tests these critical levels.

39:26

If the price breaks below the support level on the three-minute chart, it may indicate a more positive outlook since volume decreases sharply beyond this point, showing a low volume node. However, the price must overcome multiple resistance levels to proceed. Volume and price movements are currently aligned, showing no strong buying pressure, with minor price fluctuations around support. Monitoring broader market conditions like the dollar is recommended for context, and examining slower timeframes may provide additional insights.

40:18

Importance of slower time frame charts

42:05

Renko and non-time-based chart use

42:05

The speaker analyzes a non-time-based chart, adjusting settings to understand pip values across different timeframes. They explain that each brick on the chart represents roughly one pip and compare values at 13 seconds, 15 seconds, 10 seconds, and 32 seconds, noting that higher timeframes show higher pip values. The analysis identifies the beginning of a market move but indicates it may not be the best trading opportunity currently due to concurrent movements in the euro and yen.

43:17

The discussion continues with insights into price action, noting that when two currency lines move together, the trend strength is less dramatic compared to when they cross. The example of euro-dollar is used to highlight dollar selling across multiple time frames. Despite the yen strengthening alongside the euro, which dampens the trend, there are still profitable opportunities. The speaker also mentions the use of trend monitors and trend dots as effective indicators closely aligned with price action, aiding in identifying market transitions.

44:17

Trend monitor and staying in trades

44:17

The speaker explains a subtle trend change where trend dots move from the bottom, through the middle, to the top of the candle, indicating shifts in market pressure. Despite these changes, the trend monitor initially shows no change, maintaining its color on the 1.6 brick size chart. However, on the 2.2 brick size chart, a shift in sentiment becomes apparent as the trend monitor transitions to blue, signaling a crossover of time-based and non-time-based chart analyses that help traders interpret market movements more effectively.

45:15

The discussion highlights the importance of technical tools like the trend monitor and trend dots in managing inevitable market pauses and pullbacks, which often cause traders to exit prematurely and regret it later. The main challenge in trading is emphasized as staying in the market during these pullbacks rather than just timing entry or exit points. These tools are designed to help traders maintain their positions through temporary reversals, enabling them to capitalize on longer-term market movements.

46:13

Trading psychology and approach

46:13

The speaker discusses the importance of understanding one’s own trading psychology before choosing a trading strategy. They emphasize patience when trading reversals and the need to be comfortable with the risks involved for potentially greater returns. The educational program starts with psychology to help traders identify their strengths and weaknesses, allowing them to develop a tactical approach that suits their personality and lifestyle. Time availability also influences trading style, as some approaches like scalping require constant screen time and may not fit those with full-time jobs or other commitments.

47:42

The focus shifts to market observation, specifically monitoring the rising US dollar and analyzing futures market data. The speaker reviews various currency futures such as the Australian dollar, British pound (cable), and Canadian dollar, noting that the futures prices reflect inverse relationships and ongoing movements consistent with dollar strength.

48:16

Dollar strength and futures market

48:16

The speaker discusses dollar strength and weakness across various currency pairs including the euro-dollar, yen-dollar, and New Zealand dollar. They highlight that many pairs are moving in the same direction, leading to congestion rather than clear trends, exemplified by the pound-dollar pair. However, the Australian dollar is rising against the dollar, creating a notable trend.

49:12

Further analysis reveals that several currencies such as the Canadian dollar, euro, and pound are moving in alignment with the dollar, while the Japanese yen behaves uniquely and is challenging for novice traders. The Swiss franc shows some movement as well, with buying of the franc and selling of the dollar reflected in spot market charts.

50:14

The New Zealand dollar is experiencing strong buying pressure against the dollar and has broken through a resistance area, moving toward a low volume region that could allow rapid price movement. However, a previous market top nearby requires cautious analysis. The speaker emphasizes the importance of selectively picking trades based on market conditions and personal trading focus, whether on specific pairs or more broadly.

51:21

Traders often narrow their focus to a select group of currency pairs that suit their comfort and trading style. The volume price analysis (VPA) methodology presented provides technical tools that traders can tailor to their strengths and weaknesses. Many traders integrate VPA with other techniques like Elliott Wave or Fibonacci, finding it a valuable missing component that enhances their overall strategy. The speaker notes that current market conditions are challenging and require diligent analysis.

53:05

Market sentiment and indices overview

53:05

The speaker analyzes the sentiment of US indices on Globex, noting a lack of strong market drivers and describing the price action as indecisive and tepid. They then shift focus to the Euro versus the Australian dollar and Euro versus the US dollar, highlighting a notable move with strong selling pressure on the dollar across multiple time frames.

54:22

Euro dollar volume and price action

54:22

The speaker analyzes a 15-second chart, noting significant volume under a particular candle but no follow-through, which raises some concern. The candle has a wide spread and decent volume, indicating potential but uncertain momentum. The transition to a one-minute chart shows a low volume area and a generally positive trend, though the speaker remains cautious as it might just be a pause in a fast-moving timeframe.

55:07

The discussion continues on price movement breaking through a resistance level, which has now turned into support. Volume is declining on the volume profile, signaling a transition towards bullish sentiment despite encountering some resistance. The dollar is noted to be falling to a 90.84 spot, which supports the positive trend. The overall picture is stable with some signs of upward momentum.

56:17

Attention shifts to the 30-minute chart, highlighting high volatility with a large candle accompanied by significant volume. The speaker emphasizes the importance of switching between timeframes to piece together the overall market picture. The euro is rising strongly against a falling yen and dollar, with the dollar dropping further to around 90.80. This setup is considered comfortable without immediate risks.

57:29

Focus is placed on the volatility indicator, which triggers as soon as the average true range metric is met, even before a candle closes. This real-time signal is valuable across all timeframes. The speaker plans to watch for this trigger on slower timeframes as it could indicate a potential reversal or congestion. Current volume, price, and agreement metrics are favorable, supporting the ongoing analysis.

58:01

Volume price analysis and reversals

58:01

The speaker explains the power of the trend monitor indicator, emphasizing its ability to keep traders in positions during strong moves, thus enabling larger winners to offset numerous smaller losses. They acknowledge the emotional challenges traders face in holding profitable trades and highlight that trading is inherently difficult, requiring strategies to cope with frequent pullbacks.

59:01

Volume Price Analysis (VPA) is introduced as a powerful tool to help traders determine whether price movements represent primary reversals or just temporary pullbacks, aiding in decision-making to stay in trades. The speaker notes a current pause in the market with volumes declining, indicating a potential pullback or trend continuation.

59:39

The discussion shifts to currency strength indicators across multiple time frames, showing the euro as overbought and the yen and dollar as oversold on shorter time frames. The speaker explains how these indicators suggest there is still room for price movement, and cautions that observed pullbacks may vary in significance depending on the time frame analyzed.

01:00:50

The speaker elaborates on how pullbacks and reversals manifest differently across various time frames, from minor kinks on shorter charts to potential full primary trend reversals. They emphasize the importance of synthesizing technical data with visual observations of currency movements to better anticipate whether a reversal is temporary or more significant.

01:01:53

The conversation concludes by highlighting the influence of time frame on trading strategy, noting that the dollar is showing early signs of strength on the one-minute chart. The speaker stresses the need to align trading decisions with one’s chosen time horizon, whether very short term or longer, to effectively interpret market signals and act accordingly.

01:02:21

Time frame discipline and focus

01:02:21

The speaker discusses the importance of focusing on your specific trading timeframe, comparing it to a blinkered horse that concentrates solely on the winning line without distraction. They emphasize avoiding confirmation bias by sticking to your strategy, being disciplined, and not switching to slower timeframes prematurely. If a trade doesn’t work out, the advice is to exit and move on to the next opportunity. The segment concludes with the speaker acknowledging they have gone over time and inviting questions.

01:03:24

Program summary and funded accounts

01:03:24

The speaker introduces a comprehensive calendar of important events available in the VPA room and discusses an education program focused on forex trading. This program is now enhanced to allow students to leverage knowledge using funded money, eliminating personal financial risk.

01:03:57

Students in the program can trade with the company’s money under specific rules detailed in a downloadable PDF and online resources. The evaluation starts at $5,000, $10,000, or $15,000, and upon passing, the account size is multiplied by four, allowing significant growth opportunities.

01:04:52

The account funding can scale up to $2 million through successive doublings. Participants earn a profit share starting at 35%, increasing to 40% after the evaluation phase, providing both skill development and income potential by trading large funded accounts.

01:05:27

The profit share is paid monthly, with the initial evaluation payout as a lump sum at the end of the process. The program requires a low one-time fee to join and is designed to help traders build consistency and skills that can be applied to large accounts, whether personal or professional.

01:06:23

Indicator platforms and resources

01:06:23

The speaker discusses technical tools available at quantumtrading.com, including MT45, 78, and TradingView TradeStation, with upcoming launches planned for the month. These launches will include versions 9.5, related to Interactive Brokers, and version 10 for TradeStation Securities, focusing primarily on stocks and currency futures. Afterward, they plan to port the tools to TradingView, adding several indicators like the matrix, array, heat map, V-Park, and spot resistance to complete the package. Users who invest in the full package will receive all future indicators free of charge. Additionally, Anna’s analysis can be found at anacooling.com.

01:07:28

Closing remarks and upcoming sessions

01:07:28

The speaker concludes by mentioning that all related books are available on Amazon in both Kindle and paperback formats. They invite viewers to join the upcoming 3 PM UK time session for the U.S. market or to enjoy the rest of their trading day and week. They also announce a break after next week’s final episode of the current series before Christmas, with plans to start a new series in 2021.

 

By Anna Coulling – creator of volume price analysis