Focusing on the EUR/AUD in the London forex session and volume price analysis

Focusing on the EUR/AUD in the London forex session and volume price analysis

In this video, Anna focuses on the EUR/AUD pair as the London forex session gets into full swing, applying Wyckoff principles, particularly effort and result, one of Wyckoff’s three laws. This is the third law, which in simple terms means price and volume. The effort is the volume, and the result is the price action, and whether this is in agreement with the volume or in disagreement. An anomaly in other words. Volume price analysis reveals the truth behind the price action.

00:10

Introduction to Euro Aussie Renko analysis

00:10

The speaker discusses analysing the Euro-Aussie market using two platforms: MT5 with Renko charts and NinjaTrader with multiple timeframes (60, 15, 10, and 3 minutes). They highlight observing Wyckoff patterns, especially the effort and result principle, which indicates that the current market move is unlikely to continue much longer. The market is described as very volatile with spiky, whipsaw price action, characterised by wicks on both the tops and bottoms of candles. The speaker emphasizes the importance of using non-time-based charts, like Renko, to better interpret such volatile market conditions.

01:28

Renko chart features and indicators

01:28

The speaker explains the Renko chart for the Euro-Aussie currency pair, which filters out noise by focusing on price movement rather than time. Each brick represents a 3 pip value. The Renko indicator, integrated with other quantum indicators and platforms like T54 and NinjaTrader, highlights trading opportunities. Key features include trend dots on the bricks and time charts, a trend monitor, pivots, fractals, and price-based support and resistance lines. Solid lines indicate strong support or resistance levels where price reactions are expected.

02:44

Trend dots and support/resistance levels

02:44

The discussion focuses on a significant price level at 8450, which has been tested over time, making it a strong level. The speaker analyzes the alignment of dots and the trend monitor, noting a setup for a potential reversal, though not due to accumulation or distribution but because of some anomalous candles in the price region. They describe a price run-up accompanied by blue dots and a blue trend monitor, followed by a pullback near 8450 where the price hesitated to move higher.

The trend monitor shifted from a strong positive indication to a less intense red, signaling a trend change. The speaker emphasizes the importance of observing multiple matching dots (three to five) alongside a trend monitor change to confirm signals. They note that current market moves are not smooth but show a downward trend, illustrated by red signals at a particular entry point.

04:32

Trend monitor colors and pullbacks

04:32

The segment discusses the price trend analysis showing a minor pullback that did not fully turn bright red, indicating the trend remained upward. Different colors represent trend conditions: bright blue for strong uptrend, gray for congestion zones, and bright red for downward moves. Despite some pullbacks and resistance lines, the trend monitor maintained the uptrend through to the London market open, where significant volume entered and created the appearance of a potential reversal, prompting traders to react.

05:27

London open volume and price traps

05:27

The speaker discusses price action around the London open, noting that volume surges often cause apparent reversals that then revert to the original downward move, drawing traders in. They highlight a color change in the chart indicating momentum shifts and emphasize that entering trades before the London open with some profit is common. The speaker advises that traders can always re-enter or explore other pairs, depending on the timeframe, as the London open impact varies between faster and slower timeframes. They also explain that Renko charts help deconstruct trends and serve as a momentum measure, providing clarity amid market volatility.

06:37

Renko measures momentum and entries

06:37

The speaker explains that the current trend lacks strong momentum, as shown by the Renko chart, which displays a slow, labored move rather than a steady series of falling red bricks indicating strong downward momentum. Renko charts are useful for identifying momentum, assisting with entry and exit points, and providing a clearer sense of how fast a move is progressing.

07:46

The speaker demonstrates using NinjaTrader charts with different time frames (3, 10, and 15 minutes) focusing on the 8450 price region. They highlight the importance of support and resistance as fundamental concepts in volume price analysis, showing how Renko and time charts can complement each other to better illustrate these levels.

08:24

Resistance at 8450 in time-based charts

08:24

The segment discusses a key resistance level around 84.40 to 84.50 on the NinjaTrader chart, highlighting how the price struggled to break through this area. The downward trend shown on the Renko chart is described as choppy and volatile, with significant whipsaw price action making it uncomfortable to hold positions based on time. Attention is drawn to a large candle with a substantial lower wick during the London market open, which initially suggested buying strength but ultimately led to a further price drop, exemplifying a common trap for traders anticipating a reversal.

10:09

Effort vs result in candle analysis

10:09

The segment analyzes price action on a 10-minute chart and a slower Renko chart, focusing on congestion phases and their impact on market moves. It explains how longer congestion phases often lead to strong breakouts supported by volume. The discussion highlights specific candles with narrow spreads and varying volumes, indicating effort without significant price movement, which suggests market hesitation despite attempts to push higher.

11:10

Continuing the analysis, the segment emphasizes the importance of recognizing candles where effort is high but price movement is limited, signaling potential exhaustion in the current trend. It points out that on Renko charts, price struggles near resistance levels, and such inefficient candles often indicate an impending reversal or the end of a move. Traders are advised to consider taking profits and prepare for a possible change in direction.

12:16

This segment examines rising volume accompanying a downward move, noting that although the volume appears modest compared to earlier spikes, it is significant within the session context, such as the London trading session. Key candles with small bodies and wicks, coupled with volume patterns, are identified as important signals, suggesting weakening momentum and potential shifts in market direction.

13:20

Volume-based support and resistance

13:20

The segment explains the concept of support and resistance using volume-based indicators rather than just price-based lines. The shaded areas on the chart represent volume-based support and resistance, with the yellow dashed line indicating the market’s fulcrum where buyers and sellers reach agreement. The discussion highlights that the market is encountering not only price-based resistance but also volume-based resistance, as evidenced by a notable amount of volume that signals potential weakness and a warning sign for traders.

14:31

The market enters a congestion phase with an effort to rise accompanied by an anomalous candle resembling a shooting star with significant volume. This is followed by a trap candle that misleads traders into expecting a further decline, but instead, the price moves higher with low volume before starting to roll over again. The segment emphasizes the importance of recognizing such trap candles and volume patterns to better understand market movements.

15:02

Importance of multiple signals in VPA

15:02

The speaker cautions against impulsively trading based on a single strong signal or a striking candle pattern such as a shooting star or hammer on VPA charts. They emphasize the importance of waiting for a collection of signals and candles, and considering support, resistance, and time frames before making a decision. Even with a perfect technical setup in the forex market, careful analysis and patience are necessary for viable trading opportunities.

16:05

Impact of sessions and news on trades

16:05

The speaker explains that trades often appear to be imminent and then suddenly end, typically due to session crossovers like the London session, which can cause a temporary pause before the market continues in its original direction. Additionally, unexpected political or fundamental news can disrupt anticipated setups. While such events don’t invalidate trading methodologies or setups, traders must consider them in conjunction with session timing and fundamental factors. Integrating these elements is crucial to effective trading.

17:15

Hourly chart smoothing and volume trends

17:15

The speaker analyzes price movement and volume on an hourly chart, noting that recent downward moves show significant resistance at the volume point of control. They highlight patterns of rising and falling volume across several candles, indicating a likely pullback, though the buying pressure is weak. The impact of the London trading session on volume readings is acknowledged but does not invalidate the analysis. The discussion then concludes with a handover to another speaker.

By Anna Coulling – creator of volume price analysis