Great price action on the US dollar in the London session

There was some great price action in the London forex session

There was some great price action in the London forex session with the US dollar reacting to Janet Yellen’s comments yesterday and delivering some excellent two-way price action.

00:00

Introduction and trading disclaimer

00:00

The webinar host welcomes attendees to the forex session, apologizing for the slight delay caused by technical issues. They express gratitude for the participants’ time and remind everyone of the important disclaimer about the risks involved in trading.

00:28

Volume Price Analysis (VPA) basics

00:28

The speaker introduces the concept of volume price analysis (VPA) as a method to analyze forex price action by combining price movement with volume to determine whether market moves are genuine. This helps predict future price behavior. Alongside technical analysis, fundamentals and related markets are also considered for trading decisions.

01:24

There are three strands to the analysis used for trading, applicable across time frames. The speaker references available books and a detailed forex program that guides through these elements. VPA emphasizes volume and price using candlestick patterns to narrate market action. Support and resistance, both price and volume-based, are crucial, identified using a special indicator called the volume point of control that marks volume cushions acting as support or resistance on charts.

02:37

The volume point of control indicator draws bands on charts representing volume-based support and resistance zones. Beyond the five basic VPA principles, traders can incorporate other indicators like moving averages and Bollinger Bands to aid decision-making. However, the speaker stresses the importance of understanding indicator application, such as EMAs being effective in trending markets but less so in congestion. Recognizing the chart’s state—trend, congestion, or volatility—is key. Secondary proprietary indicators have been developed to complement primary VPA tools, starting with currency strength analysis.

04:18

Currency strength and matrix indicators

04:18

The discussion begins with the CSI indicator, which shows money flow by revealing which currencies are being bought or sold. This serves as a foundational tool for traders. Next is the matrix, which ranks currency pairs to identify the strongest and weakest ones. Extreme rankings can indicate potential reversals, helping traders decide their preferred chart setups—whether to focus on overbought conditions signaling potential sells or oversold conditions suggesting a bounce.

05:18

The forex market is characterized as a mean reversion market where prices oscillate in waves. The CSI highlights money flow, while the matrix shows which pairs are most strongly influenced by buying or selling. This activity can vary by trading session, as different currency pairs perform better in certain time zones. For example, the pound and euro are active in the London session, while the US dollar is more prominent in the US session, reflecting the market’s regional influences.

06:25

The forex market operates as three distinct trading sessions within a 24-hour cycle, influenced by both local and global factors. The array indicator measures trend strength based on overbought and oversold levels. Strong trends tend to produce larger reversals, likened to an elastic band snapping back. The currency heat map is a complex tool that evaluates pairs across multiple time frames and applies weighting to provide a sophisticated view of market dynamics.

07:25

The speaker acknowledges the complexity of the currency heat map indicator and suggests dedicating a separate session to explore it in detail. The overview concludes with a brief mention of moving on to chart analysis, signaling a transition to practical trading techniques following the explanation of specialist forex market indicators.

07:56

Fundamental data and economic calendars

07:56

The discussion begins with an overview of fundamental economic data released today, noting that none are classified as high impact. Most monthly PMIs are as expected, except for Australia’s building approvals, which came in much stronger than forecast. The Australian dollar (AUD) is highlighted as a risk currency and commodity currency, influenced heavily by China’s demand for commodities like iron ore. The recent rise in commodity prices, both hard and soft, is causing appreciation in currencies of commodity-exporting countries, making it important to watch the AUD and related commodity markets alongside Chinese data.

09:59

The speaker introduces a third economic calendar resource called Financial Juice, which is more comprehensive than Forex Factory. Financial Juice allows users to view fundamental data trends similarly to price charts, helping traders assess market reactions. Unlike Forex Factory, Financial Juice sometimes includes releases not covered elsewhere and designates their importance differently. For example, the US ISM index is marked as high impact on Financial Juice but not on Forex Factory.

12:00

The conversation shifts to market reactions driven by recent statements from US Treasury Secretary Janet Yellen about interest rate hikes, which caused volatility given it is typically the Federal Reserve’s role to comment on rates. The significance of the US ISM index as an inflation gauge is noted, alongside the Fed’s preferred metric, the PCE. Another economic calendar, Trading Economics, is mentioned as a useful, more complex free resource. Finally, the topic of forex option expiries is briefly introduced, referencing detailed coverage in their forex program.

14:13

Forex option expiries and strike prices

14:13

The speaker discusses a forex live site that provides free, visually formatted information about daily option expiries, which typically require expensive subscriptions. These expiries occur at set times and involve contracts between institutions at key strike price levels. The highlighted large contracts, often worth billions or millions, are particularly important to monitor for potential market impact.

15:12

Focusing on the Australian dollar, the speaker notes a significant option expiry at the 0.7750 strike price with 956 million contracts set to expire at 9 a.m. New York time (3 p.m. London time). When price action approaches these strike prices, it can cause volatility, including price pulls or rejections. The size of these contracts is especially notable given the Aussie dollar’s relatively small market share.

16:28

Other important option expiries include the US dollar against the Canadian dollar at 1.1 and the euro against the dollar, with significant volumes exceeding a billion contracts. The speaker emphasizes paying attention to strike prices ending in zeros and fives, which are common in the forex market, as these affect stop placement and market behavior.

17:30

The forex market operates pragmatically, reflecting real currency exchanges between organizations and countries involving products like treasuries. Banks typically quote prices ending in zeros and fives, so traders should avoid placing stop losses exactly at these levels, opting instead for odd numbers. The daily expiries also adhere to this zero and five pattern. Recent market moves have largely occurred since the European and London market openings.

18:07

Euro dollar price waterfall and volume analysis

18:07

The speaker discusses the hourly chart of the dollar, noting moderate volatility and relatively small price moves. They highlight that the indicator numbers are currently low, suggesting a slowing trend. The speaker shares personal trading preferences, favoring the British pound over the euro and dollar, and mentions data from institutions showing the pound (Cable) as delivering strong pip performance over the past year, while the dollar lagged. This information is shared to illustrate institutional trading behavior and to emphasize that retail traders can also develop effective market narratives using available chart resources.

20:21

Attention shifts to the importance of upcoming fundamental events, specifically the Bank of England (BoE) meeting, which can create unpredictable price action. The speaker notes that interest rates have been largely ignored by markets until recently due to the pandemic and inflation concerns, but central banks like the Fed are allowing inflation to run hot to support recovery. The Canadian dollar often experiences strong moves ahead of central bank announcements, typically followed by snapback reversals. The BoE’s impact on sterling can be variable, sometimes causing little movement as traders await the outcome before resuming normal activity.

22:36

The discussion moves to the euro-dollar pair and a recent reversal trade observed early in the morning. The speaker explains how volume and volatility indicators helped identify a price waterfall—a sharp downward move—with rising volume and volatility candles signaling strong selling pressure. The price retreated within the average true range before continuing lower, reaching key support at the S3 Camarilla level. This support caused buying interest, evidenced by candle wicks, and an overrun beyond the S3 level indicated momentum would likely continue downward before a pause or reversal.

25:31

After the price overran the S3 support, it consolidated around volume support levels, creating a sideways congestion rather than a sharp V-shaped reversal. The speaker highlights multiple layers of support: the S3 Camarilla level, volume-based support, and price-based support, which together provide a strong cushion for potential buying. They also mention a cross on the currency strength indicator signaling a possible reversal. The importance of analyzing multiple timeframes is emphasized, transitioning from the 15-minute to the daily chart, where the prior day showed a significant downtrend stopping at volume support, suggesting the current pullback is a tradable correction.

27:45

On the hourly chart, the speaker notes that Camarilla support levels differ from those on shorter timeframes and are relevant for the entire week. The recent price move nearly reached the hourly S3 level but paused short due to other support levels on faster timeframes, especially the 15-minute chart. The speaker briefly mentions examining the move using a Renko chart, which is a non-time-based charting method, to gain additional insight into price action beyond traditional time-based charts.

29:35

Renko charts for trend and entry signals

29:35

The discussion focuses on market movement analyzed through Renko charts, emphasizing that the displayed time is actually the count of price pips rather than chronological time. The presenter highlights a double bottom pattern indicating price stabilization and suggests using Renko signals, such as trend dots and the trend monitor turning green, as conservative entry points. For trade management, entries and trend maintenance rely on Renko charts while exits are often guided by traditional time charts.

30:51

Attention shifts to the Euro-Dollar pair, which shows a positive reversal with the dollar selling off. A similar pattern is noted on other pairs like Euro-CAD, where volume support and key price levels such as the S3 pivot contribute to shorter-term trends. The Euro-Dollar’s recent moves provide good examples of combining volume price analysis with quantum indicators, demonstrating effective trading strategies across different timeframes.

31:55

The session transitions to David, who continues discussing the Euro-Dollar pair, highlighting that the US dollar is currently the driving force behind market movements. The conversation underscores the importance of selecting specific currency pairs to trade amidst dollar-driven volatility. It is noted that market reactions to news, such as comments from Federal Reserve officials, are typical and must be closely monitored for informed trading decisions.

33:00

Market reaction to news and multi-timeframe trading

33:00

The speaker explains the ‘souffle effect’ in markets, where rallies are often followed by reversals, creating opportunities for market makers to manipulate prices. They demonstrate trading the euro-dollar on multiple Renko charts using NinjaTrader, highlighting how brick sizes adjust automatically based on the timeframe and currency pair. The segment focuses on setting optimal brick sizes for 15-second, 30-second, and one-minute charts to enhance trading precision.

34:31

Continuing the discussion on Renko charts, the speaker emphasizes the utility of wider brick sizes on longer timeframes and how combining Renko charts with tools like the trim monitor and trend dots provides a powerful multi-timeframe trading approach. The trend dots change color and position to indicate trend strength and transitions, offering multiple perspectives for traders to analyze market behavior.

35:24

The focus shifts to real-time market conditions, with the dollar declining to 91.25. The speaker compares NinjaTrader and TradeStation Global platforms, explaining how TradeStation integrates Interactive Brokers data for currency futures trading. Various currency futures, including Aussie dollar, pound dollar, CAD dollar, euro dollar, and New Zealand dollar, are monitored. The price waterfall and volume patterns on these charts illustrate typical market movements and support/resistance levels.

37:01

The speaker discusses the challenge of timing trade entries, especially with reversals. They emphasize the importance of confidence and risk management when entering reversal trades, as these require wider stop losses due to higher risk that the trend may continue downward. The tradeoff between entering early with higher risk versus entering later with confirmed momentum is highlighted as a key decision for traders.

38:25

The segment elaborates on the risk-reward dynamics of entering trades during established trends versus reversals. Entering an ongoing trend presents lower risk with tighter stop losses, suitable for scalpers targeting small pip gains. Conversely, early reversal entries involve wider stops but potentially greater rewards. The speaker stresses that traders must choose a style that aligns with their risk tolerance and trading goals.

39:23

The speaker advises traders to identify whether they prefer reversal or trend trading styles and to start with micro lots to minimize risk while learning. They caution against attempting to leverage large amounts prematurely, as this leads to account blow-ups. The learning process is described as gradual, emphasizing consistency and education over quick profits. Ultimately, disciplined trading can provide a sustainable lifestyle, but it requires patience and proper risk management.

41:11

Accumulation distribution and indicator updates

41:11

The speaker discusses analyzing downtrends by observing candlesticks with large wicks to the upper body, noting patterns of price attempts to rally that fail and continue downward. They mention monitoring key levels and introduce the TradingView platform, highlighting the accumulation distribution indicator on the Aussie dollar daily chart. This indicator helps identify support levels and price strength, with plans to launch a full package of indicators soon, which will be automatically added for existing users.

42:01

The presenter explains how the accumulation distribution indicator shows strong support levels on the Aussie dollar daily chart, emphasizing the importance of key tested zones. They mention that breaking beyond these levels signals significant price movement. Additionally, they introduce the Camarilla indicator on TradingView, which has been refined and includes an option to toggle historical data. The discussion also covers a time-accurate Renko chart, which links price bricks directly to time, offering a unique view of market congestion phases.

42:57

The time-accurate Renko chart is further described as a tool that provides clean support and resistance levels and integrates price action with time. The speaker contrasts it with traditional Renko charts that lack time alignment. They also introduce the V-POC (Volume Point of Control) indicator on TradingView, which highlights volume profiles and nodes of high and low trading activity, enhancing the understanding of market structure and price behavior.

43:53

The final segment focuses on the dollar index and revisits the heat map feature on NinjaTrader, as requested by Anna. The speaker notes the advantage of NinjaTrader’s heat map over TradingView’s version, particularly the ability to select various time frames for analysis. This capability allows for more detailed and flexible market visualization, emphasizing the importance of utilizing time frame selection in trading tools.

44:20

Currency heat map and weighting methodology

44:20

The speaker explains that the currency matrix pairs on the heat map are weighted according to different time frames, with longer time frames like 30 minutes carrying more weight than shorter ones such as 1 or 5 minutes. This weighting affects the sentiment strength and ranking ladder, causing the currency pairs to move more steadily compared to rapid shifts seen in shorter time frames. The heat map is therefore different from the currency matrix and should not be confused with it.

45:20

The current strong upward trend is highlighted, with consistent bullish momentum across multiple time horizons. The U.S. dollar is falling strongly, while the Australian dollar shows signs of a possible rally. A volatility trigger is noted on several time frames, indicating an expected pullback, congestion, or potential reversal. Volume spikes and selling pressure are observed, but the Aussie dollar still has room before reaching overbought levels.

46:45

Analysis of recent price action shows some buying interest emerging, reflected by a wick on the lower candle on the five-minute chart. This suggests possible short-term pause or pullback points. The indicators provide early warnings of these shifts, helping traders anticipate changes in market dynamics.

47:13

The currency heat map is contrasted with a similar tool on TradingView, noting that the heat map uses fixed time frames from 1 minute up to monthly, which causes rankings to move more slowly and steadily. This stability contrasts with more rapid movements on platforms where time frames can be customized. The heat map’s weighting results in only minor ranking shifts during the day.

47:48

The speaker discusses the possibility of integrating flexible time frame options into other trading platforms, noting that such customization is currently available on TradingView via Pine Script. The currency heat map combines two indicators into one, with slower-moving currency pair rankings suitable for longer-term trades that may last days rather than minutes or hours.

48:47

The heat map effectively highlights extremes in currency strength, such as the strong Canadian dollar and Japanese yen pairs that have been bullish for weeks. Commodity currencies have shown a prolonged bullish trend, with positions held for months without reason to exit yet. This tool serves well for identifying long-term trend opportunities.

49:12

The discussion continues on the ongoing strength of commodity currencies and the USD’s price action, noting possible support levels that may influence short-term movements. The heat map’s ranking ladder is weighted, while the individual cells provide a comprehensive view of bullish or bearish sentiment across multiple time frames, making it a compact and useful indicator.

50:09

The speaker summarizes the heat map’s dual function: the ranking ladder offers weighted currency strength, while the cells reveal sentiment shifts across all time frames, with zero as a neutral midpoint. This compact chart provides a clear picture of market sentiment dynamics. The segment ends with a brief mention of technical difficulties related to chat window visibility.

50:46

Currency matrix and array explained

50:46

The speaker explains the responsiveness of the currency matrix and currency array indicators to market changes. The currency matrix reacts quickly and closely to price action, similar to trend dots, while the currency array reacts more slowly, like the trend monitor. The currency strength indicator isolates the strength of individual currencies, forming the basis for these tools.

51:46

Further elaboration is given on how the currency array provides a slower, more considered view of market trends, identifying overbought and oversold conditions. The heat map overlays these tools for a comprehensive view. The currency matrix and array complement each other by reacting to price action at different speeds, with the matrix being more immediate and the array more measured.

52:39

The speaker discusses the current market situation, highlighting a strong trend in the Aussie dollar. They emphasize the usefulness of the radar screen, which integrates various indicators like the trend monitor, trend dots, and volatility indicator across multiple time frames, aiding in tracking significant market moves and managing positions with lower risk.

53:14

Radar screen and volatility triggers

53:14

The segment explains how strong dollar buying or selling is visually represented on the trend monitor, with the entire display turning blue to indicate strong dollar selling and corresponding currency pair buying. It highlights the convenience of quickly navigating charts that are symbol and interval linked for real-time trend analysis.

53:42

This part demonstrates switching between different time intervals on the trend monitor, showing subtle color changes that indicate shifts in momentum, such as a slight weakening on the last candle due to a wick. It introduces the concept of a volatility trigger that appears when there is significant volume and price movement, signaling potential congestion.

54:33

The discussion focuses on the power of volatility triggers, which appear after strong volume bars and often precede market congestion or reversals. The example given is a recent trigger on the New Zealand five-minute chart, illustrating how this tool provides condensed, actionable information for trading decisions.

55:03

The narrator emphasizes the efficiency of symbol and interval linking in the radar screen tool, allowing rapid scanning across multiple time frames and currency pairs without missing critical signals. Examples include recent volatility triggers on the CAD dollar, showcasing how the system visually expands charts to highlight important market events.

55:34

This segment notes that the current market condition is dominated by dollar selling, with the dollar moving towards oversold levels on the five-minute timeframe. Traders use this information to decide whether to take reversal positions, assessing which currency pairs may offer the most profitable opportunities amid the ongoing trend.

56:02

Trading styles and risk management

56:02

The speaker discusses different tactical approaches to trading, questioning whether to use a variety of tools across multiple markets or to specialize in a single tactic and market pair. They highlight the feasibility of specializing, using index trading as an example where traders focus solely on one market to gain deep expertise.

57:29

The discussion shifts to recent price action in the Euro-Dollar pair, noting that price movements tend to rise slowly and fall quickly. The speaker analyzes a reversal pattern using Renko charts, highlighting important camarilla pivot levels where price often pauses or reverses. They describe an overrun during a sharp fall followed by a potential V-shaped reversal forming a double bottom, which is a classic technical pattern.

59:10

Further analysis of the Euro-Dollar trade considers whether the price will retrace to its starting point or continue higher. The Renko chart shows a ‘W’ shape suggesting a possible continuation upward. Key resistance levels such as R1, R2, and R3 are identified. The speaker emphasizes checking multiple timeframes and indicators like volume and volatility candles to assess potential price targets and market reactions.

01:01:30

The speaker examines the longer-term outlook for Euro-Dollar, noting that while a break lower from the volume point of control appears likely, price movements usually include pullbacks and corrections. They highlight the importance of volume price analysis (VPA) and anomalies in volume and range to anticipate stronger market reactions and to inform trading decisions across different timeframes.

01:02:32

Volume and price-based support/resistance levels

01:02:32

The speaker explains the Renko chart, highlighting how it completes a block only after a set number of pips move, which signals market momentum. They emphasize the importance of volume and price-based levels in determining where the move will pause or continue. Currently, the market has reached the volume point of control (VPOC), but there is no clear signal to suggest the next direction, so patience and careful observation of volume, levels, patterns, and candles are advised. The speaker prefers using time charts over Renko charts for exit decisions.

01:03:46

Attention is drawn to a volume resistance level that dates back to the starting point of the move. A clean volume band without lower shadows indicates stronger resistance, while bands with upper shadows suggest the possibility of breaking through. The daily chart shows potential for the price to retrace fully back to the volume point of control. The speaker stresses the importance of integrating multiple elements and time frames when analyzing the market.

01:04:49

The discussion shifts to the Australian dollar, which is rising while the US dollar is falling. Recent volume shows some weakness causing sideways price action temporarily. The speaker emphasizes applying volume price analysis (VPA) lessons across trades, using multiple time frames and indicators, and understanding relational analysis by monitoring other currency pairs, market sentiment, and indices.

01:05:44

A brief review of market sentiment for major indices shows a recovery after a rough day. The Nasdaq experienced significant declines but is starting to bounce back, while the Dow closed above its open and continues upward. Similar patterns are noted on the S&P 500 (ES). The speaker references a recent post about the Nasdaq’s 14,000 level, highlighting ongoing market dynamics.

01:06:13

Indices sentiment and indicator availability

01:06:13

The speaker discusses the resistance of a market indicator and highlights where all their trading indicators can be found, including QuantumTrading.com, MT45, NinjaTrader 7/8, TradingView, and TradeStation versions 9.5 and 10. They emphasize that purchasing any indicator comes with credits toward future upgrades or education programs, ensuring customers never lose value on previous purchases.

01:07:13

The complete Forex trading program is introduced as a comprehensive course designed to build confidence in trading the market. The speaker stresses the importance of following the program’s steps, based on over 20 years of experience, to achieve consistency and success in trading before attempting to expand one’s skills.

01:07:51

Funded forex program details and trading education

01:07:51

The speaker introduces the funded forex program, which allows traders to start with substantial real money accounts ranging from five to fifteen thousand dollars, funded by the program itself, meaning traders do not risk their own money. Traders begin with an evaluation account to prove consistency under specific trading and risk management rules. Success in this stage leads to increased funding, multiplying initial capital up to two million dollars. Participants earn profit kickbacks starting at 35% during evaluation, increasing to 50% at higher levels, and up to 60% at the one and two million dollar tiers, providing a potential steady monthly income with minimal risk to the trader.

01:09:15

The funded program involves no personal financial risk since traders use the program’s capital. The speaker directs viewers to anacooling.com for books, program links, and trading indicators available on Amazon and TradingView. They mention ongoing development of these indicators and expect the full setup to be operational soon, though timelines may vary. The session concludes with information about upcoming webinars, encouraging participants to join through provided links.

01:10:13

Session closing remarks and trading tips

01:10:13

The trading session is currently at a pause with the dollar holding steady around 91.22. There may be some congestion ahead, but the overall trend remains bearish. It’s important to watch for reversals during the US session as market dynamics often shift between morning and afternoon. The speaker thanks the audience for joining.

01:10:42

The speaker expresses hope that viewers enjoyed the session and signs off with a farewell.

By Anna Coulling – creator of volume price analysis