How to enter a trend once it is underway

How to enter a trend once it is underway

In this video from the forex webclass we explain how to enter a trend once it is underway and using multiple timeframes. The problem many forex traders have is deciding when to enter a trend, fearful they are simply chasing price. But if you apply multiple timeframe analysis and using the Quantum Trading indicators, in particular the trends and trend monitor indicators, you will have a clear insight into when the trend is pausing or reversing, or whether it is set to continue.

00:10

Introduction and session crossover impact

00:10

The speaker explains the choice of analyzing the Pound-Canadian Dollar (Pound CAD) currency pair due to its behavior at the London market open and session crossovers. They mention using multiple time frames and highlight that NinjaTrader shows local time, making it easier to track market activity. The initial move shows a downward trend before the London market opens, followed by strong buying in the pound.

01:17

The speaker discusses how NinjaTrader’s local time display helps in identifying market moves immediately. They note that the strong pound buying after the London open is a key driver of the current price action, but the Canadian dollar is not showing strong selling pressure. This imbalance indicates that the move is primarily fueled by pound strength rather than Canadian weakness.

02:19

The speaker cautions that the observed reversal is driven mainly by the pound’s strength during the session crossover, while the Canadian dollar remains relatively strong. They explain their personal trading bias towards short positions and describe how they prefer to trade the inverse of a currency being bought by selling it against another currency, using Pound CAD as an example.

03:26

The speaker elaborates on their strategy of selling currencies that are being bought by trading pairs where that currency is the counter currency, favoring short trades. They highlight that markets generally fall faster than they rise, which aligns with their preference for short trading positions. This approach is contrasted with other traders who might focus on buying.

04:27

The speaker continues to explain the tendency for markets to fall faster than they rise and mentions that while this short bias works well in forex, there are exceptions such as yen pairs where the yen is always the counter currency. They suggest that futures markets offer an alternative because currencies are quoted against the dollar, allowing short trades on yen futures.

05:22

The speaker summarizes the current market situation for Pound CAD, noting a weak rally and persistent strength in the Canadian dollar. They mention a volatility trigger to the downside accompanied by increased volume at 8:00, indicating significant market activity during this session crossover.

05:53

Volume and price action analysis at London open

05:53

The segment discusses price action and volume during the London open, focusing on four candles and volume bars. It highlights a volatility trigger with a moderate increase in volume compared to the European session. The volume surged further in the next candle, reaching about one and a half times the previous volume, despite narrower price spread. The importance of comparing similar time frames (‘light with light’) in volume and price analysis is emphasized.

06:47

This part explains an anomaly where a significant volume surge occurred five minutes into the session, but the candle spread was narrower than expected. It introduces the core principle of volume price analysis: looking for confirmation or anomalies between price movements and volume levels. If volume increases significantly, price action should reflect that proportionally, otherwise an anomaly is identified.

07:52

The explanation continues by reinforcing the method of comparing volume and price data only within the same session or similar time frames, avoiding cross-session comparisons. The speaker points out signs of weakening price movement despite volume changes, describing it as labored and hard work to move higher. This segment highlights how volume trends can signal underlying market strength or weakness.

08:49

As the European session begins, volume picks up as expected, increasing further during the London session. The segment briefly transitions to a discussion about market behavior, specifically why markets tend to fall more quickly than they rise, indicating a shift in focus towards market dynamics and volume’s role in these movements.

09:29

Market dynamics: faster falls than rises

09:29

The speaker analyzes the Aussie Yen movement during the London session, showing a gradual upward trend on a planar chart with camarilla levels refreshed every 24 hours. They highlight the complexity of the move, noting multiple pullbacks visible on the Renko chart from the MT5 platform, with trend changes indicated by color shifts. Although some points suggested the trend might end, the upward momentum was reestablished after breaking through resistance levels.

11:14

The discussion shifts to market volatility at the US open, where despite an initial upward trend during Globex trading, the markets sharply reversed and moved sideways before rising again near the close. This quick drop illustrates how rapidly markets can fall, contrasting with the steady grind higher seen earlier. The speaker notes this pattern was specific to the US market and highlights the challenging nature of such trends compared to others like the Euro CAD.

12:30

Focusing on the Aussie Yen’s overnight Asia Pacific session, the speaker points out volatile candles and buying pressure pushing prices higher, including specific candlestick patterns like hanging men and trend lows. They discuss the R4 indicator, which suggests the price is attempting to reach 76.18 but may pause before deciding whether to continue higher. The segment concludes by reaffirming the idea that markets tend to fall faster than they rise, before transitioning to analysis of the Pound CAD on a 5-minute CSI chart.

13:49

Pound CAD trade setup and currency strength

13:49

The segment discusses the volatility caused by session crossovers and how traders can be misled into false moves, particularly regarding the pound. It highlights that while selling the pound against the dollar is an option, a stronger opportunity lies in selling the pound against the euro due to the euro’s strong rise. The importance of choosing the right currency pair based on current market trends is emphasized.

14:47

This part explains the rotational nature of currency strength, where the pound’s strength or weakness shifts among different pairs over time. Currently, there is strong selling of the pound and strong buying of the euro, indicating a clear and strong trend. The segment also notes an emerging trend in cable (GBP/USD) due to increasing strength in the dollar, although it is not yet as pronounced.

15:37

The focus here is on the behavior of currency pairs involving the Swiss franc, euro, pound, yen, and Canadian dollar. It points out that currency pairs can remain overbought or oversold longer than expected, requiring patience for reversal trades. Traders should set wider stop losses and wait for trends to develop rather than anticipate quick reversals, highlighting the need to decide between trading established trends or waiting for potential reversals.

16:33

This segment outlines how the trend monitor shows bearish momentum developing quickly on shorter timeframes, while longer timeframes remain unchanged. It reflects that market movements after the open have been minimal and emphasizes the ongoing selling pressure on the pound. The discussion also includes the broader sideways movement on the pound against the Canadian dollar and the importance of context when analyzing these trends.

17:31

The final segment introduces the majors matrix, highlighting major currencies like the pound, Aussie, euro, dollar, New Zealand dollar, and Swiss franc. The speaker points to the daily charts as particularly interesting for the pound, suggesting upcoming changes and trends that are worth monitoring closely for trading decisions.

18:06

Daily chart insights and piano key patterns

18:06

The speaker discusses the concept of ‘interval links’ in chart profiles, highlighting the appearance of weakness in the cable market on a specific timeframe. They describe ‘piano keys’ patterns, which resemble keyboard keys, and explain how overlaying these patterns on a two-day timeframe reveals repeated attempts to rally that ultimately fail, indicated by small bodies with large wicks to the upside. This recurring ‘effort to rally’ pattern is accompanied by higher volume but little price movement, signaling weakness in the longer-term outlook for the pound-dollar pair.

19:34

The analysis continues by emphasizing how the pound-dollar outlook depends on broader dollar market movements, particularly whether dollar selling or buying persists, which can reverse trends in major currency pairs. The speaker advises intraday traders to consider the daily chart for context, including opening and closing prices and current price position relative to the previous close, to better understand intraday price action. They then shift focus to currency strength multiples on various short timeframes, explaining that these tools serve as a starting point for market analysis.

21:03

Using currency strength indicators for trades

21:03

The discussion explains how to identify trading opportunities by analyzing currency pairs, emphasizing that when two currencies like the euro and Swiss franc rise together at the same speed, there is no momentum or trade opportunity. The analogy of two trains moving at the same speed illustrates the lack of differential needed for a strong trend. The CSI (Currency Strength Indicator) is highlighted as a valuable tool to reveal overbought or oversold conditions and the strength of buying or selling in currencies.

22:06

The speaker notes that some currencies, such as the Australian and New Zealand dollars, are moving sideways or sliding slowly on short time frames, while the Japanese yen has seen significant selling. The market sentiment is further explored by referencing the VIX index, which remains elevated but slightly decreased, indicating ongoing risk sentiment. The segment also introduces a quick check of US futures, noting bullish trends despite the US cash market being closed.

23:07

The segment explains that although the US cash markets are closed, electronic trading on Globex shows surges in volume in futures contracts, a fact many traders may overlook. This highlights the interconnected nature of financial markets and the continual flow of risk-on and risk-off sentiment across various trading venues, whether electronic or physical.

24:15

The interconnectedness of all markets—spot, cash, ETFs, and electronic—is emphasized, with the core concept being risk-on versus risk-off money flow. The VIX is starting to rise again, which correlates with slight downward movement in indices and the yen’s behavior. The speaker points out that these relationships are reflected across multiple time frames and asset classes.

25:12

Attention shifts to short-term trends in the yen and Canadian dollar, where yen buying is just beginning on the one-minute chart, while selling of the Canadian dollar is already underway but lagging on longer time frames. The speaker stresses the importance of patience and watching for extremes in overbought or oversold conditions before entering trades, noting that the yen is not yet cooperating strongly enough to confirm a robust trend.

26:06

The current market condition is described as congested, with the yen and Canadian dollar moving in a similar direction, limiting strong trends. Traders are advised to carefully select where to look for opportunities—whether focusing on extremes or existing trends. The Swiss franc and euro are rising, while the dollar shows signs of weakness, prompting a review of the currency matrix to monitor these developments.

27:07

The speaker demonstrates using a trading platform to analyze the euro-dollar pair, which is showing a developing trend supported by a volatility trigger and good volume. The use of a tick speedometer indicator is introduced to measure participation strength, with current readings indicating healthy momentum between green and orange zones. This supports the observed strong rise in the euro and fall in the dollar.

28:15

Further analysis shows the Swiss franc gaining strength against the dollar, highlighted by a large volatility candle that suggests a potential reversal or congestion phase. The euro and Swiss franc are now in overbought territory. Meanwhile, the Canadian dollar is beginning to sell off, but the yen remains uncooperative, indicating that certain yen pairs like euro-yen may offer better trading opportunities.

29:06

The segment concludes with the speaker switching back to a workspace to examine the euro-yen pair, which is expected to provide clearer trading signals given the current market conditions. The loading delays mentioned reflect the heavy data flow being processed to identify precise trade opportunities.

29:53

Euro Yen congestion and breakout phases

29:53

The discussion begins with an analysis of the Euro Yen currency pair across various time frames, highlighting transitional movements and trend confirmations on short intervals like 15 seconds and one minute. The presenter notes a strong upward movement with blue trend monitors indicating a volatility trigger but sustained volume supporting the trend. They emphasize the importance of examining multiple indicators, including the currency matrix, which shows universal selling of the yen, reinforcing the strength of the Euro Yen pair’s upward trend.

31:45

Anna introduces the concept of congestion phases as the foundation for trend development, explaining that markets spend a lot of time in sideways movements characterized by accumulation or distribution. These phases are not to be feared but understood as periods where the market balances buying and selling without a clear directional bias. Different congestion phases have unique characteristics, from tight ranges to volatile choppiness, which are described using the metaphor of sea states in their program.

33:33

The Euro Yen pair is examined during a congestion phase showing attempts to break out on strong volume, supported by key technical indicators like volume point of control and accumulation/distribution levels. Despite a volatility candle indicating a temporary retreat back into congestion, the pair shows strong support levels and volume patterns suggesting a potential upward breakout. However, the price must overcome resistance to confirm this breakout.

35:37

Analysis continues with a focus on the CSI (Congestion State Indicator) on the 10-minute chart, which detects divergence and congestion phases. A cross on the CSI just before 4 o’clock signals a potential trend reversal or breakout. The speaker describes how alerts notify them of possible trade setups as divergence forms after congestion. The Euro Yen shows signs of moving higher following these signals, with volume increasing during the breakout attempts, though the pair later enters another sideways phase around 6 o’clock.

37:31

The Euro Yen’s directional movement is tracked through subsequent congestion and breakout phases, with volume spikes confirming trend strength. The pair bypasses resistance levels like R4 without hesitation, aiming for key targets around 125 to 125.55. While the Euro shows signs of potentially rolling over, the yen continues to weaken strongly. Traders are advised to wait for congestion phases to resolve before joining trends, using divergence signals from indicators like the CSI to confidently enter trades.

39:37

The final segment emphasizes the importance of understanding trend structure and using indicators to identify and join trends confidently. The Euro Yen continues its strong trend with trend monitors confirming momentum, and the yen’s decline supports the movement. The speakers conclude by acknowledging the time overrun and preparing to wrap up the session.

39:42

Trading platforms, indicators, and education info

39:42

The speaker highlights various online platforms where their trading indicators are available, including quantumtrading.com and Trader MT4. They discuss the upcoming integration with TradeStation, emphasizing its powerful charting capabilities and features like radar screen with automatic indicator signals. TradeStation Global, linked with Interactive Brokers, offers discounted trading combined with advanced charting tools.

41:07

The speaker shares excitement about launching their indicators on TradeStation soon after resolving initial issues. They plan to expand to TradingView, leveraging new Pine Script capabilities that now support object and line drawing, enabling development of advanced indicators like currency matrix, array, and heat map. Full package TradingView users will receive these new indicators free as a thank-you for their investment.

41:35

The speaker notes that the price of the TradingView package and education program will increase as more indicators are added. They encourage purchasing now to benefit from the current lower price. Resources such as books by Anna Cooling and various analysis links are available. The complete forex trading program, hosted at quantumtradingeducation.com, includes over 200 hours of video content covering core trading modules and is supported by an active traders’ room for daily interaction and support.

42:33

The speaker thanks attendees and announces upcoming sessions on Thursday afternoon and next Tuesday morning after a holiday. They express appreciation for participation, wish everyone well for the trading week ahead, and sign off with hopes for better weather.

By Anna Coulling – creator of volume price analysis