How to read the chart and trend using volume price analysis

How to read the chart and trend using volume price analysis

In this video, we explain how to read the chart and trend using volume price analysis and supported of course by the Quantum Trading tools and indicators.

00:11

Renko charts and Cable analysis

00:11

The speaker discusses market behavior focusing on the cable (GBP/USD) and pound-yen currency pairs, highlighting their sideways movement. They explain how to analyze price action using Renko charts, especially during strong trends where a reversal is unlikely but further downside is expected. The example of cable is used to illustrate how to identify potential entry points in such scenarios. Additionally, the CSI indicator’s usefulness is emphasized, as it provides real-time insights and trade signals. The discussion also touches on the VIX index, which is referenced by David on his TradingView platform.

01:28

Using investing.com for charts

01:28

If you don’t have access to TradingView, investing.com is a recommended free alternative. It offers charts for nearly every financial instrument and includes analysis, sometimes featuring the speaker’s own insights. The site provides valuable resources that typically require payment elsewhere.

02:00

Understanding the VIX volatility index

02:00

The segment explains the concept of volatility indices, focusing on the VIX, which tracks the S&P 500 and serves as a key international benchmark for market risk sentiment. The S&P 500 reflects overall market sentiment, with rising values indicating positive sentiment. The VIX is known as the ‘fear index’ because it rises when market fear increases and falls when the market becomes complacent and takes on more risk. Additionally, while the Nasdaq and Dow Jones have their own volatility indices, the VIX remains the most widely referenced by analysts and traders.

03:49

Nasdaq and Dow Jones volatility indices

03:49

The speaker explains that while ‘hero’ is used generically, more specific volatility indexes exist such as the VXN for the Nasdaq and the VXD for the Dow Jones. They emphasize that when the index rises, you want to see these volatility indexes fall, illustrating how these indexes behave inversely to the market movements.

04:24

Forex market impact and BOC meeting

04:24

The market is currently showing increased risk appetite, which typically leads to a rise in currencies like the New Zealand dollar and the Kiwi dollar, with the Canadian dollar also potentially strengthening. However, the Canadian dollar’s movement may be influenced by an upcoming Bank of Canada meeting. Additionally, attention is on the British pound (cable) for a possible technical reversal, presenting an opportunity for a quick trade.

04:59

Trading time frames and Renko setup

04:59

The discussion focuses on suitable time frames for trading, particularly the use of faster time frames such as second charts available on NinjaTrader, which are not accessible on MT4 or MT5. The example given involves a Renko chart for the GBP/USD pair, showing a small but valid trading opportunity of a few pips. To replicate this on platforms without second charts, a Renko chart with a very small brick size (e.g., three pips) can be used. This setup aligns with trend indicators turning blue, signaling a potential entry point around 129.30, allowing for a modest profit of 10 to 15 pips.

06:25

Technical signals for Cable reversal

06:25

The speaker discusses a minor pullback in the downward trend visible on the Renko chart, noting that the set three pips absorbed the movement, preventing it from showing up. They suggest that the currency pair Cable might be setting up for a technical reversal trade. The decision to trade depends on the trader’s preferred timeframe and risk tolerance, whether aggressive or conservative. The speaker also highlights that traders should consider if they are comfortable with faster timeframes before deciding to enter a trade. Additionally, they mention that in short markets, prices tend to fall faster than they rise, while reversals to the upside are generally slower and more gradual.

07:41

Trading psychology: patience and aggressiveness

07:41

The speaker explains that recovering from a sharp decline in prices tends to be slow and requires patience, as upward reversals after fast drops are often gradual and can feel frustrating. While some traders prefer short positions due to this, the speaker suggests there may be a more conservative opportunity to trade an upside move in the cable market. The approach involves waiting for clear signals on the time chart, using tools like the CSI indicator with filtered data to identify potential entry points.

08:46

Volume and momentum in Cable price action

08:46

The segment discusses the price action of the Pound versus the US Dollar on a three-minute chart, highlighting the upward movement of the volume point of control. The speaker notes a recent piece of price action that suggests a potential breakout attempt, supported by an upward candle with increasing volume and momentum. The Renko chart is introduced as a tool that not only shows price but also clearly illustrates the structure of price movements including trends, congestion, and reversals. The unique aspect of Renko bricks, which are based on pip value rather than time, is explained, emphasizing how fast market movements generate consecutive bricks unlike time-based candles. The segment concludes by cautioning that after sharp declines, rebounds can be gradual and labored.

10:29

Support, resistance and trend confirmation

10:29

The speaker analyzes a trading situation involving congestion and changing trend indicators, noting the importance of matching trend dot colors before making a move. They emphasize assessing support and resistance levels to gauge potential room for the price to move higher or lower. Currently, the price has slightly surpassed the S2 support level, providing some upward headroom, though caution is advised if it approaches resistance levels closely, as it may struggle to break through.

11:37

Daily chart and technical support levels

11:37

The speaker analyzes a daily chart showing a recent significant price drop and an attempt to recover to a key technical level, the 200 moving average. They note the presence of natural technical support and discuss the concept of a low volume node on the chart, which suggests that if the price breaks through this point, it could lead to a rapid further decline. The advice given is to wait for the downward move to finish and for a congestion phase to form, then use support and resistance levels along with volume to make informed trading decisions.

12:38

Waiting for congestion and breakouts

12:38

The speaker explains the use of different technical tools like camarilla, fibonacci, and moving averages to mark significant support and resistance levels on charts. They emphasize waiting for a break and considering multiple factors before entering a trade to rejoin the trend. The discussion highlights a pause observed at the S3 level, indicated by candle patterns, including a hammer candle with modest volume, signaling a potential halt in the downward move. Although not a sharp V-shaped reversal, this candle provides an initial technical indication of a possible reversal, which is stronger with higher volume and followed by congestion confirming the reversal.

13:52

Trading persona and time frame preference

13:52

The speaker discusses the importance of understanding your trading persona when using Ninja Trader or similar platforms. They emphasize that your personality and comfort level with different time frames should guide your trading style. Factors like patience, preference for quick trades, and emotional comfort are crucial. The speaker dismisses the idea that age strictly limits the suitable time frames, instead focusing on individual traits and stress levels in trading.

15:57

Stop loss strategies and CSI indicator

15:57

The discussion focuses on trading strategies involving stop losses and price targets. Various methods for setting stop losses are mentioned, including volume point of control, price-based levels, support and resistance, and camarilla levels. The importance of monitoring the CSI indicator is emphasized, as its current behavior suggests a potential end to the current market move. The speakers highlight that trading decisions depend on individual preferences and chart signals, with no single right or wrong approach. Additionally, they mention tools like Ninja Trader and settings such as ATR on indicators to help optimize trade entries and exits, with examples of capturing small pip gains.

17:40

Renko ATR settings and scalping risks

17:40

The speaker explains the use of a market speed indicator based on the ATR value or a user-set pip value. A faster pip setting is intended for scalping and results in frequent stop-outs due to tight stop-losses, but can yield significant gains on strong moves. The discussion then transitions to handing over to David for further commentary.

18:45

David takes over to summarize the morning’s events during a slightly later session at 3 PM UK time. The session includes traders from the US, and the recording will be split into multiple videos and posted on YouTube later.

19:24

CAD/JPY trend strength and indicators

19:24

The speaker discusses switching to the Canadian dollar (CAD) chart to illustrate the strength of the trend, highlighting a strong upward movement as the CAD rises and the New Zealand dollar (NZD) falls. The trend is confirmed by breaking previous resistance levels, now acting as support, and is visible on a 5-minute chart and currency strength indicators. The CAD shows a strong intraday trend, while the NZD still has some downward momentum. A volatility trigger suggests possible congestion or consolidation ahead.

20:15

The speaker briefly pauses to attend to a personal task before sharing resources for further information, directing viewers to quantumtraining.com for access to various trading indicators compatible with platforms like MT4/5, NinjaTrader 7/8, TradingView, and TradeStation. They mention ongoing development work on version 9.5 for TradeStation Global and Interactive Brokers, highlighting significant effort invested in these updates.

20:42

Trading platforms and upcoming updates

20:42

The speaker discusses integrating interactive broker accounts with TradeStation, highlighting the platform’s powerful features such as RadarScreen for identifying and managing trading opportunities. They mention plans to enhance TradingView by porting over missing indicators enabled by new object and line drawing capabilities in Pine Script. Customers who previously invested in the full TradingView package will receive these additional indicators for free as a thank you, with the package price expected to increase afterward. The speaker also indicates ongoing development efforts for other platforms like MultiCharts.

22:05

Quantum Trading education program

22:05

The speaker introduces the Complete Forex Trading Program available at quantumtrading.com, highlighting its comprehensive coverage of five core modules: psychology, fundamental, relational, technical, and the mechanics of trading. The program includes additional options like VPA charts and detailed explanations on using various indicators. With over 200 hours of video content, webinars, and a daily VPA trading room hosted by the speaker and Anna, the program is designed to be thorough and user-friendly. They express pride in the program’s development and positive student feedback. Additionally, Anna’s website annacooling.com offers further analysis and access to related books.

23:26

Additional resources and webinar schedule

23:26

The speaker wraps up the session, mentioning that all materials and links are available. They thank the audience for attending, express hope that all questions were answered, and announce a follow-up US session at 3 PM. They remind viewers of upcoming schedules, including two webinars on Tuesdays starting next week, and wish everyone a good trading day and week.

By Anna Coulling – creator of volume price analysis