How to identify the next level for the NQ emini using the Camarilla levels indicator

How to identify the next level for the NQ emini using the Camarilla levels indicator

As the NQ Emini continues to rampage higher and breaking out into new high ground, it’s difficult to forecast here the next level might be. But not if you use the Camarilla levels indicator for NinjaTrader and here I explain how.

00:00

Introduction and disclaimer

00:00

The speaker welcomes everyone to the webinar, mentioning it is afternoon in the UK. The session will focus on markets, primarily futures and some commodities, along with Forex. The speaker reminds viewers of the trading disclaimer, emphasizing the risks involved in trading.

00:32

Volume Price Analysis overview

00:32

The session emphasizes the importance of using only money one can afford to lose when trading. It introduces volume price analysis (VPA) as a method to interpret charts, combining price action with volume data to determine the genuineness of price moves. The approach is based on five key principles: price, price axiom, volume, support and resistance, candle patterns, and timeframes. Time is considered through multiple timeframes and the interaction of price and volume over time, with a special indicator developed to analyze these factors.

01:43

Volume Point of Control indicator

01:43

The speaker explains the concept of the volume point of control, which is similar to concepts in market profile, emphasizing that the best understanding comes from observing charts in real time. They highlight that this methodology applies across all timeframes where volume data is present. Additionally, they mention a companion book containing practical examples covering indices, stocks, commodities, and Forex, aimed at helping users apply these principles effectively.

02:50

Session format and audience

02:50

The speaker discusses specialist trading tools developed for personal use that are now available to other traders. They acknowledge the presence of Forex program students and invite all participants to ask questions via the chat box. Answers will be shared with everyone during the recorded session, which used to be uploaded as a whole.

03:22

Non-farm payroll and market impact

03:22

The speaker explains their approach to breaking down long videos into shorter segments for easier consumption. They mention that the recent non-farm payroll report was released ahead of the Independence Day weekend, noting that markets tend to finish on a positive note before the holiday. The payroll data showed mixed signals: jobs increased more than expected, the unemployment rate dropped, but unemployment claims rose. The average hourly earnings are also a critical factor to watch. The market’s reaction to the NFP data typically involves quick volatility driven by algorithms and traders reacting to the news, followed by a price retracement.

05:07

Trading volatility and risk management

05:07

The speaker discusses strategies for intraday trading during major market releases. They emphasize the challenge of widened spreads in Forex brokers, which can make trading directly on the release difficult. Traders must decide whether to place limit orders and accept the risk or wait until volatility subsides. After the initial market reaction, it is important to analyze the price action and chart structure to guide further decisions. Managing open positions during high volatility involves considering partial profit-taking and carefully setting stop-losses, as volatility can cause stops to be ignored. Ultimately, there is no single correct approach; trading decisions should be based on sentiment and risk tolerance.

06:45

Market sentiment and chart analysis

06:45

The Nasdaq, Dow Jones, and S&P are all rising significantly, but traders should be cautious when interpreting these charts. Day traders often rely on fast-moving charts and may be tempted to short at perceived market highs, though this can be risky because markets can continue climbing unexpectedly.

07:19

Many traders lose money by acting on the belief that the market can’t go higher and rushing to short sell. Although shorting can be profitable, the current market environment is resilient and driven by a fundamental battle between the impact of the virus and progress on vaccines.

07:51

Recent news about vaccine developments, including optimistic statements from political leaders, has fueled market optimism, especially in the Nasdaq. While the situation remains uncertain, the possibility of a vaccine is a key factor influencing market movements.

08:27

Millions have lost jobs and life remains disrupted, making vaccine news crucial for market sentiment. Traders can stay updated using tools like Google Alerts on virus and vaccine news, as the market eagerly awaits positive developments that could signal a return to normality.

08:56

Several vaccines show promise, and the Federal Reserve continues aggressive monetary support to prevent market decline. This combination creates a trading environment marked by cautious optimism amid ongoing virus concerns, especially in key states like Arizona.

09:34

At all-time market highs, investors face three fears: missing out on gains, having missed the upward trend, and uncertainty about when to sell to maximize profits without losing gains. This emotional dynamic influences trading behavior during market peaks.

10:07

Fear, hope, and VPA signals

10:07

The discussion focuses on market emotions and technical analysis tools used to predict potential reversals. When the market is favorable, fear dominates, but during losses, hope drives expectations of recovery. Volume Price Analysis (VPA) is highlighted as a key method to identify possible major reversals, especially when examining slower timeframe charts. The speaker uses the Nasdaq 100 (NQ) as an example, noting its strong upward movement and widespread attention from traders and media. Various metrics, including support and resistance levels and moving averages like the 200-day MA, are considered important indicators. It is noted that the NQ is currently about 62% above the 200-day moving average, a level similar to where it reversed previously, suggesting the potential for consolidation or distribution phases ahead. Overall, combining VPA with these metrics on longer timeframes helps anticipate market direction.

12:25

Camarlillo indicator and key levels

12:25

The speaker discusses trading pairs using support and resistance levels, highlighting a custom Camarillo indicator developed with six levels instead of the traditional four. This indicator provides multiple time frame levels that update with each new trading session, offering specific levels tailored to different market periods rather than a one-size-fits-all approach.

13:32

Using a 10-minute chart example, the speaker explains key levels where the Nasdaq tends to pause or struggle, particularly at the fourth resistance (R4) and support (S4) levels of the six-level indicator. These levels often serve as points for price retests and reversals before potentially moving higher to R5 and beyond.

14:49

The significance of round numbers ending in zero or five is emphasized, as these tend to be psychological and order flow levels where large traders place big orders. These levels, when aligned with the indicator’s key points, create stronger areas of resistance or support, making price movement more challenging around these numbers.

15:52

The speaker reviews levels on the 60-minute to daily charts based on a 100-day data series, showing weekly pre-calculated levels in play. The Nasdaq (NQ) had broken out past the R4 level after spending significant time around it, supported by high volume initially and then declining volume, indicating a meaningful price action shift.

16:26

Multiple timeframe level confluence

16:26

The speaker discusses price action around resistance levels, specifically mentioning consolidation near the R5 level before testing the R6 level. They emphasize the importance of multiple time frame analysis, noting that when resistance levels align across different charts, they become more significant. Moving to the weekly chart, the speaker highlights how extreme price moves can cause panic, but points out that the volume accompanying a large weekly candle is relatively low, suggesting caution in interpreting upward momentum.

17:55

The focus remains on significant price levels, with the speaker mentioning various resistance points like 10,500 and R5, and noting the proximity to R6. They reference additional levels further out, including a target around 11,000, but clarify that these are not guaranteed targets, rather potential areas of interest for future analysis.

17:58

Weekly chart volume and price targets

17:58

The speaker discusses a potential price target indicated by the chart from a price action perspective, emphasizing that the move’s validity depends on volume confirmation, which currently seems inconsistent on the weekly chart. They acknowledge the hope for a market rally driven by positive vaccine news, highlighting the widespread desire to overcome the ongoing pandemic. The segment reflects on the severe impact of the virus, including fatalities unrelated to preexisting conditions, and expresses optimism that vaccine developments could help end this difficult period. Investors who bought during the v-shaped reversal are commended, and the discussion touches on managing fears amid the uncertain market environment.

19:39

Support levels and market outlook

19:39

The discussion focuses on key support and resistance levels in a chart, particularly around the 10,000 mark, which acts as a strong support platform. The speaker emphasizes the importance of observing price action at all-time highs and suggests analyzing multiple time frames, volume, and price action to confirm trends. These levels help predict potential stops if the price reverses or moves downward.

By Anna Coulling – creator of volume price analysis