How to day trade soft commodities and indices without a futures account

How to day trade commodities such as wheat and corn, and indices without a futures account

How to day trade commodities such as wheat and corn, and indices without a futures account, and the answer is to use either MT4 or MT5.

00:00

Webinar introduction and agenda overview

00:00

The webinar begins with a welcome and an introduction to the topics. It will cover the futures market first, followed by a break lasting between 10 to 15 minutes. After the break, the focus will shift to stock day trading. Forex trading will not be covered in this session since it was addressed earlier in the London session, and that recording is available on YouTube.

00:28

Trading disclaimer and risk warning

00:28

The speaker begins by reminding viewers of the disclaimer regarding trading risks. They emphasize the importance of only using money that one can afford to lose. The speaker also briefly touches on the relevance of the chart methodology, which involves volume analysis.

00:59

Volume price analysis principles explained

00:59

The speaker explains that price analysis principles are consistent across different markets, including crypto, commodities, indices, and stocks. Volume price analysis (VPA) focuses on price action, volume, candle patterns, support, and resistance. They mention a foundational book on VPA available on Amazon, with specialized versions for crypto and forex markets. The concept centers on identifying anomalies where price action and volume do not align, signaling important market insights. An example involving the pound-yen currency pair is referenced to illustrate how to interpret these signals when the market trends upward.

02:33

Market overextension and trader sentiment

02:33

The market is causing nervousness due to prolonged bullish trends and recent economic data, including the FOMC meeting and better-than-expected GDP figures indicating economic progress and lower inflation. Traders follow the market flow and key price levels, recognizing that prices rarely move vertically without pauses or congestion. These levels act as critical points where the market either continues upward or reverses.

03:45

Market pullbacks and corrections can present trading opportunities, especially on fast or specialized charts like tick or renko charts, allowing traders to capture small gains while keeping the overall market bias in mind. Momentum varies daily; strong upward moves discourage short positions, but slower days offer more balanced opportunities. Share trading differs somewhat, requiring a distinct set of criteria due to varying bullish dynamics.

04:50

The focus shifts to Volume Price Analysis (VPA), which incorporates volume, price, candlestick patterns, and support/resistance levels. Emphasis is placed on volume levels derived from the Volume Point of Control (VPOC) indicator, a hybrid approach combining volume-at-price data to better understand critical market levels beyond just price-based support and resistance.

05:24

Volume point of control and support/resistance levels

05:24

The speaker explains the concept of the volume point of control, which marks the price area where the most volume has transacted over time, represented by a yellow line on the chart. This point shifts as prices move, indicating congestion and eventual breakout either upward or downward, confirmed by volume activity. They also describe two types of price-based support and resistance levels derived from indicators: a solid thicker line indicating stronger levels and a dashed line representing weaker levels, both of which influence price bounce and market structure.

07:07

The volume point of control indicator also includes bands acting as dynamic support and resistance. These bands sometimes slightly breach, adding nuance to market interpretation. The default look-back period for this indicator is 140, but the speaker prefers 80, which performs well across time frames. They emphasize the importance of evaluating support and resistance levels across multiple time frames to better understand key market levels.

08:22

The discussion shifts to using camarilla levels, which are calculated weekly on the hourly to daily charts and remain relevant throughout the week. A recent example with the Pound Yen currency pair illustrates how price moved through daily levels and then targeted hourly levels, specifically moving to the R5 and then R6 resistance levels. The speaker notes that once price passes through these levels, they can act as targets for price retracement. They also mention that the principles discussed are applicable across different markets, including futures and stocks.

10:02

Broader market view including bond yields and forex

10:02

The speaker discusses the importance of having a broad market perspective across various asset types, emphasizing the recent focus on bond yields as key indicators of market sentiment. Rising yields, particularly to 2.5%, could trigger significant market reactions, especially in foreign exchange markets where a sell-off of the yen signals positive market sentiment. The Nasdaq (NQ) is highlighted for its strong upward movement, approaching a critical resistance level at 14,000. If this level holds and breaks, it could establish a solid support base and lead to further gains. Despite reaching all-time highs, market participants often experience fear and worry during strong upward trends.

11:51

Currency strength indicator and futures trading basics

11:51

The speaker discusses trading emotions when trades go against you, citing Jesse Livermore on market extremes and the Currency Strength Indicator (CSI) as an example, particularly highlighting the Canadian Yen as the strongest currency. The CSI incorporates RSI principles of overbought and oversold conditions but is not a pure RSI. The indicator can show overextended moves that may snap back. The speaker prefers using MT4 over NinjaTrader for futures trading due to cost efficiency and availability of synthetic futures CFDs.

13:29

The discussion moves to futures markets, focusing on the E-mini Nasdaq 100 (ENQ) and volume point of control levels. A significant resistance level around 14,000 is noted, with volume data suggesting that despite some pullbacks, the trend has been strong. The speaker benchmarks volume and price action against past candles, identifying anomalies where volume does not match expected price movement depth, indicating potential market behavior nuances.

14:41

The speaker analyzes price-based resistance levels around 14,200 on hourly charts and emphasizes the importance of testing these levels with volume confirmation. They note the presence of volatility candles and recent price action near all-time highs, suggesting the market may need to stabilize after recent moves. The role of volume under down candles is highlighted as a key factor in confirming potential reversals or continuation.

16:21

Zooming into multiple timeframes, the speaker identifies a two-bar reversal pattern at a price and volume resistance level near the volume point of control. Despite the open creating volatility and uncertainty, the overall market bias remains positive. The presence of a large candle with significant volume but a doji-like shape indicates market indecision, and the speaker suggests using MT4 and Renko charts to filter noise and better interpret price action.

18:29

Renko charts are introduced as a tool to simplify price action by visually representing geometric trends and pullbacks. The speaker explains the concept of primary and secondary trends, emphasizing the need to assess volume on time-based charts to distinguish between a minor pullback and a viable reversal. They advise waiting for the market to calm down after volatility spikes before making trading decisions, noting volatility indicators that signal uncertainty.

19:46

The speaker discusses how narrow spread candles with high volume and volume-price discrepancies can indicate potential reversals. They explain that when price moves higher but volume falls, it signals weakening momentum. Volume Price Analysis (VPA) helps identify these divergences and trading opportunities. The importance of multiple confirming signals rather than isolated candles is stressed, alongside monitoring volume and price levels for clues about market direction.

21:29

At all-time highs, markets often enter congestion phases where volume stabilizes and price fluctuates within a range, making day trading challenging. The speaker notes seasonal patterns like ‘sell in May and go away’ that contribute to this behavior. Patience is crucial during such periods, waiting for volume and price levels to confirm breakout or breakdown. Weekly charts showing large volume under down candles indicate strong buying support, highlighting the importance of reading individual candle volume to understand market dynamics.

23:02

Commodity market focus: wheat and inflation impact

23:02

The discussion begins with the importance of analyzing groups of candles across multiple time frames and in groups rather than individually. The speaker shifts focus to commodities, particularly wheat, highlighting recent price movements influenced by the Federal Open Market Committee (FOMC) decisions. While forex traders closely watch the FOMC, index traders should also pay attention due to its impact on inflation and commodity prices. The Federal Reserve appears willing to tolerate inflation overshooting its 2% target, and commodity prices like wheat have been rising significantly since March, reflecting underlying inflationary pressures in food prices.

24:14

The speaker explains that the Fed’s definition of inflation differs from the public’s perception, especially regarding food prices which are rising sharply due to commodities like wheat and soybeans. This divergence might lead to future conflicts over inflation measures. Additional factors such as the virus and potential shortages could exacerbate commodity price increases later this year and next year. The wheat market shows signs of strong buying support indicated by a large hammer candle with significant volume, suggesting a potential upward trend despite some recent consolidation.

25:25

The segment discusses market behavior following consolidation phases, emphasizing patience during periods of sideways movement and volume changes. A deep wick on a candle with high volume suggests strong buying interest, while volume declining during sideways price action indicates indecision in the market. The speaker highlights the use of volume analysis and price levels from previous trading sessions to identify significant support and resistance. Anomalies in volume and candle shape can reveal whether a market move is likely to continue or reverse.

26:32

The wheat market is expected to retest previous highs based on volume support levels and market structure, with primary trends, pullbacks, and consolidations becoming clearer when using Renko charts alongside time charts. The speaker suggests combining these charting methods for better trade entry decisions. Soybean charts show a similar pattern, reinforcing that the principles discussed apply broadly across soft commodities.

27:04

The conversation transitions to copper, with a brief review of soybean price action showing a strong upward trend followed by a two-bar reversal and a shooting star candle indicating potential resistance. The presence of a doji candle suggests market indecision and the possibility of a pullback. The speaker emphasizes that the trading principles remain consistent across different commodities and invites questions before passing the discussion to David for further commentary on copper.

28:05

Market sentiment update with silver, gold, and copper

28:05

The speaker provides a market update focusing on sentiment and price movements. They note a positive shift in market sentiment with an increase in points and highlight the behavior of key indices such as the YM and NQ on five-minute and daily charts. Despite bullish trends, early market volatility remains high as expected around market opens.

29:06

The discussion shifts to silver and gold price action, particularly a sharp price drop or ‘price waterfall’ in silver seen on five-minute charts. The drop pierces through low volume nodes rapidly, hitting the volume point of control, with buying volume increasing but unlikely to halt the downward momentum immediately. This illustrates classic price waterfall dynamics in volatile markets.

29:56

The speaker explains that breaking through the volume point of control is akin to breaking price-based support or resistance, typically resulting in quick price movement due to lack of order congestion. They compare this pattern across multiple time frames on gold charts, noting initial buying attempts slow the decline but reversing the heavy selling pressure requires significant buying effort.

30:45

Using the analogy of an oil tanker, the speaker describes how heavy selling momentum is hard to stop immediately, requiring a mopping-up phase or congestion before any reversal. Gold is highlighted as struggling on daily charts but may benefit in the medium to long term from inflation and commodity super cycling, potentially pushing prices well above $2000.

32:08

The importance of analyzing related markets when trading commodities like gold and silver is emphasized. Attention turns to copper, which has been rallying strongly on daily charts with some signs of potential congestion. Intraday volume price analysis (VPA) is used to assess rally sustainability, noting that volume falling during a price rise suggests a weakening trend likely to reverse.

33:03

Further analysis of copper’s volume and price action reveals that short-term rallies lack volume support and are vulnerable to decline. The speaker advises patience for longer-term holders despite short-term weakness, noting some dollar and yen buying interest but no major concern currently. The segment ends discussing the use of multiple time frame trend monitors, which show mostly bearish trends intraday despite a strong longer-term bullish backdrop.

34:25

Trend monitoring and intraday trading signals

34:25

The speaker explains how to use the trend monitor effectively by observing changes across multiple time frames, starting from the fastest. They highlight a transitional effect where the trend changes to red, indicating a potential downtrend developing intraday. The example focuses on copper, showing gradual trend movement through different time frames with a minor volatility trigger noted but deemed not very significant. Silver is also mentioned as continuing to decline, reinforcing the bearish sentiment.

35:29

The downtrend in silver is confirmed as the price continues to fall, with the trend monitor showing a consistent bright red signal indicating no immediate change in trend. The speaker advises staying cautious and waiting for confirmation. Attention then shifts to gold, which is starting to break away from the volume point of control (VPOC). The speaker suggests checking higher time frames and volume histogram levels to identify potential support or resistance areas, using the accumulation distribution indicator for additional insight.

36:24

The focus moves to futures, which are showing weakness despite strong corporate earnings from companies like Apple. The speaker notes a brief rally indicated by a small wick on the chart reaching around 14,050 before falling back, signaling a lack of strength in the market. This suggests cautious sentiment despite positive fundamental news.

37:00

Soft commodities and signs of market weakness

37:00

The speaker reviews current market conditions with a focus on futures and soft commodities. They highlight that despite recent strength, signs of weakness are emerging in the daily charts, indicated by high volume, large upper wicks, and selling pressure. This suggests profit taking rather than a full trend reversal. The analysis includes specific examples such as wheat, where similar patterns suggest potential short-term weakness.

38:06

The discussion shifts to the importance of support levels in maintaining a bullish trend on daily charts. The speaker explains that daily price action can provide valuable insights for intraday traders about potential market direction. The segment concludes with a transition back to analyzing multiple time frames using different minute intervals on the YM (Dow futures) chart.

38:38

Multiple time frame analysis and volume-price interaction

38:38

The market is currently trading within the volatility candle formed at the open, indicating uncertainty and a need for patience. Key indicators such as the volume point of control (VPOC) and the market fulcrum are visible on all charts, serving as important reference points. Volume and price action need to break away from this range to initiate a trend. Although price is falling, volume is also decreasing, suggesting that selling pressure is weakening and a potential upward move may occur. Traders should carefully set levels and watch for resistance, particularly around strong price-based resistance visible on the accumulation distribution indicator. A rally approaching the volume point of control could face resistance as volume drops sharply at that level.

39:51

Webinar conclusion and next steps

39:51

The speaker wraps up the session, mentioning the need to clear away due to low volume in the current segment. They note an upcoming webinar and thank viewers for watching, expressing hope that the audience enjoyed the presentation and promising to see them again soon.

 

By Anna Coulling – creator of volume price analysis