Getting started with volume price analysis

Getting started with volume price analysis

Discover the foundational elements of volume price analysis.

00:02

Introduction and trading disclaimer

00:02

The webinar begins with an introduction to day trading, focusing on the U.S. session, Forex market, indices, and commodities. The presenter emphasizes the importance of the disclaimer about the risks involved in trading, urging viewers never to use money they cannot afford to lose. This caution is repeated to highlight the serious nature of trading. Newcomers to the session are welcomed, and the agenda for the webinar is briefly outlined.

01:07

Overview of volume price analysis

01:07

The speaker introduces the focus on various markets, primarily indices, with some Forex analysis for specific reasons. The methodology used throughout is volume price analysis, a technique developed over 20 years ago by the speaker and David. They reference a detailed book available on Amazon that thoroughly covers this methodology. Many webinar attendees have purchased the book, specialized software, or joined their Forex program. The book serves as a comprehensive guide to Forex price analysis and is now complemented by a companion with worked examples to address common questions from traders and investors.

02:13

Books and examples on VPA methodology

02:13

The speaker introduces a companion book containing over 200 examples focused on stocks, indices, and some commodities, with a separate version for the forex market. The discussed methodology combines price action observed on charts with volume analysis to provide a comprehensive approach to trading.

02:55

Volume analysis and price action

02:55

The segment explains different ways of analyzing volume in trading. It distinguishes between volume bars shown at the bottom of charts and volume measured at various price levels over time. The concept of volume point of control is introduced, represented by a histogram on the charts, which is used in conjunction with price action for detailed analysis.

03:30

Higher timeframe and daily chart example

03:30

The speaker emphasizes the importance of analyzing multiple time frames when trading, particularly the daily time frame. They discuss an interesting candle-volume pattern observed on the NQ chart, which was highlighted in a blog post. This pattern, related to Volume Price Analysis (VPA), can foreshadow future price movements several days in advance. The speaker also explains that VPA signals may not produce immediate results, especially on slower time frames, requiring patience as the signals develop over time.

04:47

Reversals and candle patterns explained

04:47

The session continues discussing reversals in trading, focusing on why they occur due to sentiment, news, fundamentals, and geopolitical events. These factors are reflected in price charts through volume and price analysis. The speaker explains the importance of examining candle patterns, support, and resistance to determine if reversals are genuine. An example using the Aussie yen illustrates how a hammer candle pattern signals a potential reversal, noting the currency pair’s sensitivity to risk as it fell alongside indices.

05:48

Aussie Yen and price-volume signals

05:48

The speaker explains the correlation between the Aussie yen and market risk sentiment, noting how the currency pair moves with market indices. A recent price action shows a hammer or pin bar pattern indicating a potential reversal after a fall. However, the reversal’s strength is uncertain due to moderate buying volume, which is less than what would be expected for a strong V-shaped recovery.

06:56

The price action has entered a consolidation phase with decreased volume, possibly due to the time of day and resistance levels. While the hammer candle is a positive signal, it should not be relied on in isolation. Traders might consider exiting short positions in response to this signal, depending on their risk tolerance and position size, and then observe how the price develops in subsequent phases.

08:03

The discussion shifts to combining candlestick reversal signals with support and resistance principles, focusing on the daily chart of the NQ index. The analysis highlights early buying that led to higher index levels. Additionally, related FX markets are examined for their leading indicators, as they often provide early clues for index movements.

08:37

FX market and indices relationship

08:37

The speaker discusses an unusual market movement where the US dollar pairs (Y M pairs) rose despite overall indices falling, which is typically unexpected. This anomaly was observed both recently and previously. Shortly after this divergence, the indices also reversed direction. The advice is given for Forex traders to monitor indices closely, and for stock traders to watch Forex market movements, as these markets can influence each other. The segment concludes with an invitation to ask questions during the session.

By Anna Coulling – creator of volume price analysis