Discover the power of the renko chart for trading forex

Discover the power of the renko chart for trading forex

In this part of the forex trading session I show you how to trade forex using the renko chart on the NinjaTrader platform. And in addition, you will discover the importance of using the trend monitor and trends indicators using this approach.

00:13

Pound Aussie market awaiting Andrew Bailey press conference00:13

The discussion focuses on the Pound to Aussie currency pair, highlighting a period of congestion following a move higher after the Bank of England announcement and the London market opening. Despite anticipation, Andrew Bailey’s press conference at 12:30 did not generate significant volatility, and price action remained subdued.

00:47

Congestion phase and volume decline in Pound Aussie

00:47

The discussion focuses on the behavior of the pound and the Australian dollar, noting that both were overextended but moving in the same direction, leading to market congestion. This congestion caused trading volume to decrease, resulting in a lack of momentum to push price movements decisively. The pound was anticipated to rollover, hitting significant resistance levels on the hourly chart, including the R1 and Camarilla pivot points, which aligned with the observed congestion patterns.

02:07

The speaker demonstrates the resistance levels on the chart, highlighting the importance of visualizing these points to understand price movements. By adjusting the chart view to include more days, they confirm the presence of resistance, reinforcing the earlier analysis about the market’s congestion and the potential for a rollover.

02:47

Volume point of control shifts lower during congestion

02:47

The speaker explains the concept of the volume point of control (VPOC) on an hourly chart, highlighting its dynamic nature and how it shifted lower due to an extended congestion phase in the price action. This movement reflects changes in volume distribution over time, where the VPOC adjusts based on the depth of volume in different price areas. The discussion emphasizes how these volume-based indicators relate to support and resistance levels during periods of price congestion.

04:04

Hourly and 15-minute chart resistance and reversal analysis

04:04

The speaker explains the bearish movement of the pound against the Australian dollar, highlighting how the volume profile (VP) has shifted lower during the day. They focus on the hourly chart showing resistance at the R1 level, coinciding with the volume point of control (VPOC). The analysis transitions to a 15-minute Renko chart, which is non-time based and forms bricks based on price movement of about four pips each. This chart helps identify the reversal point and entry opportunities more clearly.

05:18

Using the NinjaTrader Renko chart with real-time timestamps, the speaker describes the congestion period before the market rollover and subsequent downward trend starting just before 1 PM. Despite minor pullbacks indicated by green bricks, the overall trend remains bearish, as confirmed by red trend dots. The importance of aligning these indicators—the Renko bricks, trend dots, and trend monitor—is emphasized for confirming trend direction and entry points.

06:25

The discussion turns to the use of Camarilla pivot levels on the NinjaTrader platform, which are not available on MT4/5. The speaker explains how price often retests significant support or resistance levels, particularly the fourth pivot level (R4 or S4), which helps traders stay in trades. The combination of trend dots, trend monitor, and these pivot levels provides a robust strategy for monitoring price action and managing entries and exits effectively.

06:56

Using accumulation/distribution indicator and cluster factor

06:56

The NinjaTrader platform includes an indicator with various customizable settings, such as the cluster factor, which is set to zero by default. At zero, the indicator picks up many minor support and resistance levels, which works well on time charts but creates a noisy, cluttered view on Renko charts due to frequent small price movements. Increasing the cluster factor to 80 filters out these minor lines, leaving only significant levels that have been tested multiple times, thereby providing clearer and more meaningful chart structure.

08:02

Understanding Wyckoff’s laws and primary vs secondary trends

08:02

The speaker explains the importance of identifying key price levels where price may reverse or pause. They emphasize understanding Wyckoff’s three laws and differentiating between primary and secondary trends, which is crucial for traders aiming to align with the main market movements.

08:33

The discussion focuses on recognizing primary trends, noting that trends rarely move in a straight line but include pullbacks and consolidation phases. The speaker highlights how resistance levels can cause price to stall temporarily before the primary trend resumes.

09:05

Understanding whether a pullback is a minor correction or a full reversal has significant implications for trade management, including entry, exit, and position sizing. The speaker notes that this knowledge helps traders manage their contracts and overall money management effectively.

09:42

As traders gain experience, they tend to increase their position sizes to achieve larger rewards. The speaker refers to a 15-minute chart example showing a volatile consolidation phase where a buyer was active but with high volatility, illustrating the challenges of trading in such conditions.

10:19

In highly volatile market conditions, such as the ‘sea state’ described, traders should consider reducing position sizes to manage risk. This contrasts with more measured volatility seen in other currency pairs, where trading opportunities may be more stable and predictable.

10:54

Importance of support/resistance levels and camarilla hierarchy

10:54

The speaker discusses the recent downward trend in the pound-dollar currency pair, noting a pause at a key support level, specifically the S4 level of the Camarilla indicator. This indicates the price is stuck between two significant support and resistance levels. Emphasis is placed on the importance of using charts with tools that identify these key areas, such as quantum indicators or Fibonacci levels, to provide structure and hierarchy to trading analysis.

12:03

Understanding trends, including primary and secondary trends, alongside volume analysis, is crucial for profitable and enjoyable trading. The speaker addresses a student question about chart setup, advising against overcrowding charts with too many indicators. Instead, traders should find a comfortable balance of information. The speaker exemplifies this by using a Renko chart with selected tools like levels, trend dots, pivots, and a trend monitor to maintain clarity and effectiveness.

13:07

Volatility indicator and managing fast market moves

13:07

The speaker explains the use of various trading indicators including support and resistance, the Camarilla, volume, higher time frames, and a volatility indicator. The volatility indicator is highlighted for its real-time signals, showing when fast price movements create momentum that can trap traders who hesitate. This rapid movement often triggers fear of missing out, causing premature entries and potential losses as prices retrace within the candle spread. The volatility indicator can also be used strategically to exit trades during strong moves, with the option to re-enter if price action and volume justify it.

14:34

Arctic speed indicator measures activity behind volume

14:34

The speaker explains the use of the Arctic Speed indicator, available on Ninja and soon on TradeStation, which measures activity levels behind trading volume. While volume continuously flows, the indicator highlights when the tick activity intensifies, shown by green signals. An increase in activity without a corresponding rise in price spread suggests that the price is unlikely to move higher. The example given is on a two-minute chart showing strong resistance and support levels.

15:38

Quantum Trading Education forex program overview and benefits

15:38

The speaker discusses their forex program available at quantumtradingeducation.com, highlighting its comprehensive coverage of essential trading knowledge. The program includes around 200 hours of video and PDF content covering psychology, fundamental analysis, relational market analysis, and advanced technical analysis based on Volume Price Analysis (VPA) and Richard Wyckoff methods. It also features a trading mechanics module focused on management, tactics, timing, and developing a trading plan.

17:37

The program is currently available on MT4, NinjaTrader, and TradingView platforms, with TradeStation support in development. They plan to release short preview videos to showcase the program’s structure and unique teaching style, designed to facilitate better retention of information. The package also includes access to various Quantum Trading tools.

18:40

The speaker hands over to David to continue and mentions they need to leave, expressing confidence in David’s capability to take over the discussion.

By Anna Coulling – creator of volume price analysis