Commodity currencies and copper in focus in the London forex session

Commodity currencies and copper in focus in the London forex session

It was commodity currencies and copper in focus in the London forex session, and a nice trade on the USD/CHF, which has fallen out of correlation with the EUR/USD, as we saw on the NinjaTrader platform with the correlation matrix.

00:00

Introduction and trading disclaimer

00:00

The session begins with an apology for the delay caused by technical issues. The host thanks the audience for their patience and attendance. Before starting, the host checks audio connectivity with David and reminds viewers to pay attention to the on-screen disclaimer.

00:33

Overview of 3D forex trading approach

00:33

The speaker cautions that trading is risky and advises against using money one cannot afford to lose. They introduce the session by acknowledging a diverse audience including forex program students and quantum users. The discussion focuses on a three-dimensional trading approach that combines chart analysis with volume price analysis, fundamental market factors, and related markets. This multi-faceted method aims to understand the drivers behind price action rather than relying solely on charts.

02:08

The speaker explains the importance of anticipating fundamental economic releases and central bank actions, which are scheduled well in advance. Although the actual outcomes can be surprising, traders can prepare by knowing the timing. They emphasize the growing significance of related markets in current conditions and introduce a practical example involving the Australian dollar to illustrate how fundamental factors influence price action.

02:42

The speaker elaborates on the three-dimensional trading approach, referencing books available on Amazon that detail their volume price analysis (VPA) method. This technique is based on five key principles including price action, volume, candlestick patterns, and support and resistance levels. They explain how these concepts help identify whether price pauses indicate a reversal or a temporary halt within the main trend, using both price-based and volume-based analysis.

03:50

Building on the VPA framework, the speaker discusses the use of additional indicators, including proprietary tools, and highlights the importance of analyzing multiple time frames. They explain how support and resistance levels on slower time frames often cause price pauses or reversals observed on faster charts, creating confluences that enhance trading decisions. The segment concludes with mention of specialized indicators developed specifically for forex trading.

04:59

Specialist forex indicators explained

04:59

The speaker explains that the forex market is largely about levels and the flow of money involved in buying and selling individual currencies and their pairs. Four key indicators provide a comprehensive view of these flows, starting with the currency strength indicator which shows what currencies are being bought or sold. The matrix then ranks these movements, indicating the strength of trends and potential reversal points. A heat map ranks all 28 currencies across multiple time frames, giving a broad perspective on market activity.

06:38

The presenter introduces a professional forex program designed to cover all essential knowledge and skills needed for success in trading. The program aims to provide traders with a comprehensive background, applicable not only to forex but other markets as well. It addresses common pitfalls like focusing on a single chart or time frame and offers options for further learning and development.

07:13

Funded trader program details

07:13

The speaker discusses the reality of trading capital, emphasizing that starting with very little money and quickly making millions is highly unlikely. They explain that funded trading programs exist to allow traders to manage large accounts by progressing through evaluation levels, potentially up to two million dollars. Such programs help build a track record useful for prop trading and institutional opportunities. The speaker invites questions about the funded program and related topics, offering contact information for further inquiries.

09:24

Market conditions and August volatility

09:24

The segment discusses the typical market conditions in August, highlighting a drop in liquidity and participation due to summer holidays in major financial centers. This reduced liquidity often leads to heightened volatility, which is further influenced by ongoing fundamental news such as developments related to the virus and China. Traders are advised to be cautious during this period: they can choose not to trade due to unpredictable price spikes, or if they do trade, keep positions small and take profits early to manage the increased risk.

12:04

The market sentiment is currently positive, with major indices like the Dow Jones and S&P futures showing gains and the VIX volatility index slightly decreasing, although still elevated relative to market highs. The Nasdaq experienced a correction but quickly recovered, now moving sideways, which is typical for August with low trading volumes. Despite the lack of a significant market correction, prices remain high, which raises some concerns about market stress and sustainability of the current levels.

13:10

Fundamental news and central bank impact

13:10

The speaker discusses unexpected spikes in volatility under certain market conditions and highlights the importance of using comprehensive economic calendars like Trading Economics over Forex Factory for tracking news events. They note that the first week of the month typically features important PMI data releases, which are crucial for traders to monitor regularly.

14:17

The focus shifts to understanding central bank communications, which are often dry and technical but essential for traders. Forex Factory provides helpful interpretations of central bank statements, such as those from the Reserve Bank of Australia (RBA), which tends to communicate in a straightforward manner. Grasping the tone and content of these statements is key to predicting currency movements.

15:26

Central bank policies, particularly interest rates, are discussed with the RBA as an example. Although inflation is rising, it is considered transitory, so interest rates are expected to remain unchanged for now. The speaker highlights the significance of the RBA’s bond tapering program, signaling that it will eventually stop, likely around September, which influences market expectations.

16:28

Market and trader expectations regarding the RBA’s tapering program are explored, focusing on whether the bank will adhere to or deviate from its announced timetable. If the RBA delayed tapering, it would be seen as dovish, leading to a sell-off in the Australian dollar. The reaction to fundamental news depends on how actual announcements differ from market expectations.

17:40

Forex Factory’s expanded news releases and commentary help traders interpret central bank statements and understand subsequent price action. The speaker notes that the Australian dollar is also influenced by its status as a commodity currency, with commodity prices typically rising during inflationary periods, adding another layer to the currency’s movements.

18:20

Commodity influence on Aussie dollar

18:20

The speaker discusses how to assess whether a currency will be strong or weak by considering central bank actions and commodity trends, focusing on copper. Copper is described as an economic barometer and a key metal for green technologies, which makes it highly important. Currently, there is a labor issue at one of Chile’s major copper mines, potentially causing supply problems that could benefit the Australian dollar, as Australia is also a major copper producer.

20:05

The Australian dollar often reflects market sentiment, strengthening in risk-on environments where investors favor riskier currencies. However, divergences can occur between market mood and the Aussie dollar’s movement due to other factors. The speaker then shifts focus to the pound-Australian dollar currency pair, highlighting it as a favored pair to analyze and suggesting viewers follow their daily forex market insights on their Learn Forex Trading Facebook page for ongoing updates.

21:12

The speaker promotes their forex content on Facebook, noting a large follower base of around 36,000. They explain that they post regular updates and fundamental news analysis, especially focused on market sentiment, using a comprehensive approach that combines multiple timeframes and chart types on their MT4 platform, including daily, hourly, 15-minute, 5-minute, and Renko charts, with a preference for faster timeframes.

22:15

Pound Aussie pair technical analysis

22:15

The speaker discusses the importance of identifying key levels on charts across multiple time frames, focusing on the Australian dollar (Aussie). They highlight a period of sideways price movement and market congestion preceding major news releases. The Aussie has been strengthening, driven by factors such as the Reserve Bank of Australia’s tapering timetable and a secondary demand layer influenced by commodities like copper.

23:27

A significant price drop occurred after volatility broke through the S3 support level on the Camarilla pivot points, eventually halting near the S4 level and the volume base, which represents the volume point of control where buying and selling balance out. The market showed no clear direction until a fundamental or geopolitical catalyst triggered the move downward, emphasizing the critical role of support levels in price action analysis.

24:36

Using an hourly chart along with Renko charts and various indicators such as the trend monitor and pivots, the speaker explains how these tools help identify potential trade entries and manage trades. The Renko chart highlights a breakout after a period of congestion, with solid red bars signaling a downward move. Traders can look for confirmation by observing if price breaks key support levels like recent lows or S2 on the Camarilla pivots.

25:54

The discussion continues on price behavior around support levels, noting that while prices often pause or reverse near the S3 level, strong momentum from volatility candles can push prices lower. The speaker shifts to a time-based five-minute chart to analyze noise and volatility, focusing on price retracing to the volume point of control and identifying potential reversal points for trading opportunities.

27:02

A notable reversal is observed around the volume support area near the European open, suggesting a viable trade opportunity after the price retests key levels. The speaker emphasizes experimenting with levels across different time frames and using Renko charts for entries. The segment ends with a transition to another presenter while the speaker regains control of their charts and shifts focus to the dollar Swiss currency pair due to its favorable recent price movement.

28:18

Dollar Swiss volume price analysis

28:18

The speaker analyzes currency strength multiples on various short time frames, noting a strong sell-off in the US dollar over the past half hour to hour, while the Swiss franc has been steadily rising since the London open. They highlight that the dollar is approaching oversold levels, and the Swiss franc is moving toward overbought, indicating a significant market move reflected across different charts.

29:21

Focus shifts to the USD/CHF currency pair, showing the dollar entering oversold territory while the Swiss franc moves into overbought on a 10-minute chart. The presenter discusses using inverse pairs and currency futures for better trading insight, emphasizing a breakout through a key support level accompanied by rising volume, which suggests a strong entry point.

30:19

The segment explains the importance of volume analysis after entering a trade. Despite rising price candles, declining volume indicates weakening momentum. This insight helps traders remain calm and avoid emotional reactions like prematurely closing a position, reinforcing the value of volume as an indicator of market strength or weakness.

31:10

Further elaboration on volume-price relationships highlights that rising prices with falling volume signal lack of conviction. Confirmation comes with a strong candle displaying good volume, but subsequent falling volume again raises caution. Similarly, falling markets with decreasing volume suggest a loss of selling momentum, indicating potential trend exhaustion.

32:04

The speaker clarifies that volume should rise in both rising and falling markets to confirm momentum, explaining the counter-intuitive nature of this principle. Currently, volume is declining, signaling the end of the recent move. Despite some buying pressure, the trend monitor remains strongly bearish, cautioning traders to watch for congestion or reversal near volume profile extremes.

33:27

An overview of multiple time frames and indices shows persistent bearish signals with only minor transitional changes in trend colors. The speaker then reviews currency indices on a five-minute chart, noting the yen starting to decline after a sideways phase, while US indices are rising amid cautious sentiment. The dollar has been mostly sideways but recently began to roll over, correlating with observed market movements. A final demonstration of analysis tools on TradeStation is mentioned, highlighting radar screen features.

35:02

Trading platforms and correlation insights

35:02

The speaker discusses using Interactive Brokers’ data feed linked to TradeStation 9.5, highlighting developed indicators compatible with this platform. They showcase currency futures such as the Aussie (6A), Cable (6B), and Canadian Dollar (6C), explaining that futures are quoted against the US dollar as the counter currency. The radar screen tool displays various indicators including the Quantum Trend Monitor, trends, and volatility, visually showing the selling pressure on the dollar across short time horizons. The indicators provide clear signals on trend direction and recent volatility triggers.

36:28

The presenter explains the difference between Swiss Dollar futures and spot markets, noting that NinjaTrader shows dollar/Swiss while futures show Swiss/dollar, effectively an inverse view. This inverse perspective offers a different way to analyze price action and volume relationships, confirming patterns seen in spot markets. The inverse indicators use different colors for clarity, providing a unique look at the currency pair’s behavior. This approach is recommended for futures account holders to gain additional insight.

37:25

Continuing with the analysis, the speaker refers to the FX correlation tool on the site massaf.net, which provides useful information on currency correlations. They emphasize the importance of understanding correlation values as a measure of relationship strength between currency pairs. The tool helps identify whether pairs move together or inversely, aiding in trading decisions based on correlation data.

38:29

The speaker defines their benchmark for significant correlations at 0.8 and above, either positive or negative, indicating a strong relationship between currency pairs. Values below 0.8 are considered weak and less reliable for trading decisions. They illustrate this with current data showing the dollar/Swiss and euro/dollar pairs having no strong correlation (around -0.43), contrasting with past data where the correlation was very strong (around 0.95). This highlights that correlations can change over time and should not be assumed constant.

39:42

The speaker elaborates that correlations, whether market or sentiment-based, can break down and are not absolute. Although some pairs, like the Dutch Krona, show near-perfect correlation, most currency correlations fluctuate. They note current lack of correlation between euro/dollar and dollar/Swiss, which historically was strong. They also identify other strong correlations such as dollar/yen with euro/yen (~0.92) and inverse correlations like dollar/CAD with euro/yen (-0.88), encouraging traders to consider these relationships in their analyses.

41:52

Rollover volatility and trading risks

41:52

The speaker addresses students about the daily rollover event that occurs at 5 PM Eastern Standard Time, which is 10 PM in the UK. During rollover, spot contracts are settled and rolled over to the next day, causing extreme volatility and low volume. This period is highly profitable for market makers and brokers due to large price swings of 20-40 pips. Traders, especially scalpers, are warned about the significant risk during rollover, as surviving this period requires wide stops. The speaker encourages viewers to observe the market at rollover time to understand its impact.

44:13

The discussion shifts to the London fix at 4 PM UK time, which also causes considerable market volatility. In the minutes leading up to the fix, major international banks position themselves, resulting in unpredictable price movements on low volume. This event lasts around 20-25 minutes and can easily trigger tight stop losses. The speaker highlights the need for traders to be aware of these periods of intense activity and volatility to avoid being caught out. The segment ends with a brief market update noting the continued downward movement of the dollar and weak attempts at rallying.

45:38

Market momentum and reversal patience

45:38

The speaker discusses the ongoing downtrend in volume despite attempts at a rally, noting light volume and continued downward movement. They focus on the Swiss franc, which is currently very overbought, indicating an inevitable but uncertain timing for a reversal. Patience is emphasized while watching for this roll over.

46:05

Trading strategies centered on extremes and reversals are described, with attention drawn to currency strength indicators. The New Zealand dollar shows strong upward momentum, while the speaker observes other currencies’ positions, preparing for potential reversal opportunities.

46:33

The focus remains on the Swiss franc at the top and the dollar and Canadian dollar at the bottom, signaling possible upcoming reversals. Early signs show the dollar starting to strengthen while the Swiss franc has yet to reverse, highlighting the need for careful observation before acting.

46:58

Patience continues to be stressed as reversals may take hours to develop. Traders are advised to set wider stop losses to accommodate potential delays and fluctuations in the market. Entering early in a trend carries higher initial risk but offers greater potential rewards compared to joining a trend already in progress.

47:24

The speaker explains the trade-off between wider stop losses and early trend entry, noting that while initial risk is higher, the potential return is greater. They conclude by referencing a technical issue with the renko chart on their trading platform, signaling a momentary disruption in their analysis setup.

48:11

Daily chart and volume point of control

48:11

The discussion begins with an analysis of an offline chart and the importance of considering the daily time frame regardless of the trading time frame. The daily chart showed a steady, sluggish trend until Friday, followed by some weakness and a candle with a wick at the bottom. Volume was low, which can indicate potential caution about the trend’s sustainability.

49:19

The presenter highlights a bearish engulfing candle on the daily chart that stopped at the S3 support level, despite low volume continuing to fall. This suggests caution, as the price action combined with low volume and key support levels requires attention. The segment emphasizes the need to integrate chart analysis with broader market context.

50:28

The impact of an upcoming RBA event is discussed, which added ambiguity to the market outlook. Despite the bearish engulfing candle and low volume, the price action respected the S3 level and continued lower to S4. The presenter explains this pullback could be a normal retracement within a primary uptrend, influenced by event-driven market reactions.

51:48

The analysis continues with the observation that the secondary downtrend may be temporary, pushed by the RBA event, while the primary trend remains upward. The importance of combining daily chart signals with fundamental news and market sentiment is stressed. Current market conditions are described as fragile due to low liquidity and volatile sentiment, with stocks near or at all-time highs.

52:59

Attention shifts to a reversal higher observed around the London market open. The concept of the volume point of control (VPOC) is introduced, which marks areas of price agreement or fair value in market profiles. The VPOC is dynamic and can shift as new price areas gain volume dominance, serving as a key support or resistance level.

53:33

The upward movement of the VPOC is interpreted as a positive signal, providing a support platform. The presenter explains how high and low volume nodes created by the VPOC can be used as markers for support and resistance. The segment also notes the correlation of these volume levels with other technical levels like R1, emphasizing the importance of the hourly chart in assessing momentum and potential price direction.

54:55

The final segment focuses on the hourly chart and its significance for traders who prefer slower time frames. A volatility candle triggered by news led to buying that halted at a key support level coinciding with the S4 pivot. This area, supported by volume profile and price action, suggests buying interest and potential price stabilization, illustrated by a hammer candle pattern.

55:28

Support resistance and renko chart use

55:28

The discussion focuses on using faster time frames in trading, emphasizing that price action is fractal and self-similar across different chart intervals. The Renko chart is introduced as a helpful tool to identify potential pauses or stops in price movements, demonstrated by its ability to reflect pullbacks more clearly than traditional five-minute charts.

56:41

Analysis continues on interpreting charts, noting how various indicators such as volume profile (VP) and support levels like S3 influence price action. The speaker explains that although some charts may suggest a reversal, other indicators show the trend is still moving up, highlighting a congestion area where multiple indicators twist together, suggesting a potential continuation of the move after a pause.

57:42

The importance of momentum and patience in trading is stressed. The Renko chart is praised for its effectiveness not only in identifying entries but also in helping traders stay in positions by providing confidence and clarity about market momentum. The challenge of remaining in profitable trades without prematurely exiting is highlighted as a key difficulty.

58:48

Further explanation of the Renko chart reveals how it tracks momentum by requiring a certain pip movement to form a new block, which varies in time depending on market speed. This feature helps traders gauge the strength behind price moves. The current pause in the market is attributed to significant support and resistance zones, reinforcing the need to consider these levels in trading decisions.

59:52

The speaker briefly loses track of their materials but wraps up by expressing gratitude to the audience and encouraging viewers to follow their educational content on Facebook for daily insights. The session ends with a warm thank you and a transition to another speaker who continues discussing Renko charts and trading strategies.

01:01:06

Renko optimizer and multiple timeframe bricks

01:01:06

The speaker introduces a popular multi-Renko chart setup used by customers, displaying multiple time frames for the New Zealand dollar—15 seconds, 30 seconds, and one minute. Using a Renko optimizer tool, they demonstrate how to select the optimal brick size for each time frame, with the 15-second frame showing a brick size of 0.5 pips. The optimizer automatically calculates the appropriate brick size depending on the chosen time frame, enhancing chart accuracy.

01:02:12

The presenter continues explaining the Renko optimizer’s function, showing that slower time frames like the one-minute chart yield larger brick sizes (1.2 pips). The tool adapts to various trading instruments such as currencies, futures, indices, commodities, and stocks, providing correct annotations for each (e.g., dollars per ounce for gold, ticks for indices). This automatic adjustment ensures traders receive optimal brick sizing regardless of the asset.

01:03:17

Below the Renko charts, standard price charts with volume and indicators are displayed for comparison. The speaker highlights how trend dots integrate well with Renko bricks, changing position and color as market trends shift. Trend dots appear above falling bricks and move beneath rising bricks, signaling bullish or bearish momentum. Additional features include pivot points, accumulation/distribution indicators, and a trend monitor that helps track market phases.

01:04:11

The trend dots react quickly to price changes, often signaling trend shifts before the trend monitor does, which takes a more cautious approach. The speaker illustrates a transition from bearish to bullish phases with clear signals from the trend dots, followed by the trend monitor’s confirmation. They then switch to TradingView to demonstrate the currency array with a new table feature, addressing common user questions and showcasing additional charting tools.

01:05:05

Currency matrix vs array differences

01:05:05

The speaker explains the updated currency array, currency heat map, and currency matrix, focusing on the differences between the currency matrix and currency array. The currency matrix operates with a short look-back period, reacting quickly to price movements and suitable for scalping, while the currency array uses a longer look-back period, smoothing out minor oscillations and providing a broader view of trend strength. The matrix is closely aligned with rapid price action, whereas the array offers a more stable and considered trend perspective. The speaker also references Anna’s website, anacooling.com, as a resource for books and latest analysis.

01:07:30

Quantum trading indicators and platforms

01:07:30

The speaker discusses various platforms where their trading indicators and tools are available, including MT4, Quantum, NinjaTrader, TradingView, and TradeStation. They explain differences between versions of TradeStation and mention that their main website, quantumtrading.com, hosts all indicators.

01:08:02

Development work is ongoing to enhance indicators on TradingView using a table feature to create a radar screen. The team is also focusing on NinjaTrader, planning to add new stock and volume indicators and improve the Market Analyzer panel. Significant development efforts are dedicated to these platforms.

01:09:01

Customers who purchase one or two indicators receive full credit toward upgrades, whether to the full package or the education program, ensuring no need to pay twice. The company also allows free platform switching without additional charges.

01:09:25

While platform switching is free, customers may need to pay the price difference if upgrading to more expensive packages with additional indicators. The speaker emphasizes they do not charge for their time in assisting customers. Buying the full package grants access to all future indicators developed for that platform.

01:10:17

Comprehensive forex education program

01:10:17

The course offers an extensive library of around 450 lessons totaling 250 to 300 hours of video content, covering a wide range of topics essential for trading. It includes five core modules: psychology, fundamentals, relational aspects, technical skills, and trading mechanics. Additional resources such as webinars, a webinar library, and topic-specific webinars are also provided. The curriculum dives deeply into various trading styles like trend trading, reversal trading, breakout trading, and the use of indicators, including detailed volume price analysis (VPA) chart examples. Furthermore, the funded forex program allows students to progress through funding levels, starting with evaluation accounts of 5, 10, or 15 thousand dollars. Successful traders can multiply their funding by four, demonstrating consistent and proven trading skills before managing larger amounts of the program’s capital.

01:11:42

Funded program trading levels and benefits

01:11:42

The program involves trading with the firm’s money, eliminating personal financial risk except for a one-time entry fee. Participants start trading at levels corresponding to account sizes of $5,000, $10,000, or $15,000, which then multiply by four as they progress, allowing trading in additional markets like indices and gold beyond the initial 28 currency pairs. The account sizes can grow up to $2 million through continuous doubling. Traders earn profit shares of 35% during the evaluation stage and 50% at the portfolio manager levels, with monthly payouts. The program includes proprietary trading indicators and is exclusively offered on the MT4 platform.

01:13:08

Program availability and closing remarks

01:13:08

The speaker explains that customers from all over the world are accepted into the program without any issues, though the reasons are not elaborated. They conclude the session by apologizing for the late start and overrun, wishing everyone a good trading day and week. They mention the next meeting will be at three o’clock UK time for the stock session and sign off warmly.

 

By Anna Coulling – creator of volume price analysis