Average true range and the power of the volatility indicator

Average true range and the power of the volatility indicator

The volatility indicator works in all timeframes and instruments, and here we see it on the 30-minute chart for the GC gold futures contract.

0:12

Introduction to volatility indicator on gold

00:12

The speaker begins by clearing the screen and inviting any questions before transitioning to discuss gold. They highlight a recent significant movement in gold prices and introduce the volatility indicator, emphasizing its simplicity and effectiveness. The speaker plans to demonstrate its power using two examples, starting with the thirty-minute timeframe.

00:50

Using volatility trigger to manage positions

00:50

The speaker explains their strategy of closing out most of a profitable position when a volatility trigger occurs, regardless of the time frame. They emphasize the importance of taking some profit off the table to avoid the uncertainty following the indicator, which is based on average true range and triggers in real time.

01:22

Volatility signals insider participation

01:22

The speaker explains that when price action moves outside the average true range, it signals volatility. This volatility suggests participation from insiders, market makers, and major operators, which is reflected in increased trading volume. The movement indicates that these key players have influenced the market to push prices upward.

01:50

Fear of missing out drives volatility

01:50

The segment explains that traders are driven by the fear of missing out, which is the essence of market volatility. This instinctive reaction is hardwired into human nature, prompting people to jump into trading opportunities to try to make quick profits. This natural behavior is a key reason why volatility occurs in the markets.

02:21

Volatility often leads to congestion or reversal

02:21

The market movement is often driven by insiders and market makers who quickly push price action to entice traders with the fear of missing out on quick profits. However, this frequently leads to market congestion or reversal. In this example, the market is congesting within the candle’s spread, causing several hours of slow and painful trading that traders generally want to avoid.

02:53

Intraday trading challenges during congestion

02:53

The speaker expresses a long-term bullish outlook on gold but finds intraday trading challenging due to market indecision. This uncertainty can be frustrating and may trigger tight stop-loss orders, potentially causing premature exits for late entries. Despite this, if the market continues its trend, the outcome will ultimately be favorable.

03:24

Strategy for exiting or reducing positions

03:24

The speaker discusses managing market positions when a signal indicates it’s time to exit. They recommend taking most of the position off the table when in profit, leaving a small portion to run. Making decisions while in a loss is more difficult, as the situation may worsen or reverse. The indicator mentioned is powerful for timing exits. If the market continues favorably after exiting, one can re-enter once the price clears the top of a specific candle, which signals a good entry point.

04:17

Following the initial exit, the market showed strong volume and price movement higher, allowing for a re-entry after clearing the candle top. However, volatility may cause multiple exits and entries as the market transitions into a congestion phase. While no trading method guarantees success, the indicator provides a warning of increased volatility and significant market participation, aiding in decision-making during uncertain conditions.

04:43

Volatility indicator effective across markets

04:43

The speaker explains that the trading strategy applies universally across markets such as forex, futures, indices, and commodities. They describe how volume and market makers influence trading decisions. A specific example is given where a trigger signal appeared on a 10-minute chart and was confirmed on a 15-minute chart, suggesting a cautious removal of positions. The discussion continues on how to re-enter trades when conditions clear, highlighting the importance of volume clusters and the point of control in congestion zones to guide trading decisions.

05:35

Patience needed for breakaway trades

05:35

The speaker discusses the strategy of patience in breakaway trading, emphasizing the importance of waiting for the market to break away. They focus on a potential upside move through price levels 44 to 46, noting that volume is declining on the 10-minute chart, which could allow the price to move with little resistance. The pressure monitor indicates continued bullish momentum, confirming the trend, and the advice is to remain patient and wait for the right opportunity.

06:06

Oil price volatility and reversal signs

06:06

The segment discusses the current situation in the oil market, highlighting recent volatility and price movements. Initially, there was a significant drop triggered by a volatility event, causing oil prices to collapse within a certain range. Now, signs of a reversal are emerging, with expectations that oil prices will begin to break upward in the near future.

06:48

Technical outlook for oil price congestion

06:48

The video discusses the volume point of control for oil prices, currently located around $28 to $29 per barrel. It notes that once oil reaches this level, congestion is expected, which is considered bullish at the moment. The speaker mentions having written extensively about oil and gold recently. While oil prices are influenced by political factors, OPEC decisions, and supply and demand dynamics, the current technical outlook suggests that price congestion will occur below $30 per barrel.

By Anna Coulling – creator of volume price analysis