How to spot reversals using volume price analysis – this time for oil

00:05

The speaker begins by discussing three key indices (YM, NQ, ES) observed on both five-minute and daily time frames, noting their alignment. Throughout the trading session starting at 8 AM UK time, the indices have been trading around the volume point of control, indicating a steady but unexciting market. This stability reflects market participants’ cautiousness as they await upcoming events, resulting in a grinding trading environment for both Globex and cash markets.

01:17

Analyzing the daily profiles over the past three days, the speaker highlights a failed attempt to rally characterized by falling volume, which typically signals weak upward momentum. Despite some upward price movements, the decreasing volume suggests low participation and interest from buyers. This pattern is consistent across all three indices, with the NQ and ES continuing to trade near the volume point of control, which serves as a strong support level.

02:21

The speaker analyzes market behavior focusing on the VIX volatility index across multiple time frames (one minute, five minute, ten minute, and daily). Despite the VIX falling since the market open on faster time frames, equity markets are not showing the expected uplift, indicating a disconnect. This unusual divergence is linked to current market dynamics influenced by volatility expectations.

03:34

Institutional buyers and major market makers are currently purchasing volatility due to anticipated uncertainty surrounding the upcoming presidential election. The expectation is that the election results may be contested or unclear, leading to prolonged market volatility rather than a swift reaction and calming as seen in previous events like Brexit or the 2016 U.S. presidential election.

04:42

There is a notable divergence where the VIX has remained around 26 despite a strong rally in equities, particularly in the Nasdaq (NQ), which would normally push volatility lower into the 10-13 range. This persistent elevated volatility reflects ongoing election-driven uncertainty dominating both intraday and longer-term market dynamics.

05:48

The speaker notes similarity in current market conditions to those of the previous week, emphasizing the importance of monitoring time and sales data and market flow when trading. The example given is the five-minute chart of the YM futures, illustrating that consistent market analysis techniques remain relevant despite increased volatility and election-driven uncertainty.

06:19

The speaker discusses trading fast time frames like 15 or 30 seconds for scalping, noting that these very fast intervals provide early signals for what might happen in longer time frames such as one or three minutes. However, they caution traders who are uncomfortable with such speed not to force themselves, especially during range-bound or consolidating market phases, suggesting it’s better to step aside or seek other opportunities.

07:18

The speaker and Anna share their experience of specializing in trading FTSE 100 index futures exclusively, emphasizing the value of focusing on a single market or instrument. They highlight that many traders prefer to specialize, such as only trading oil, indexes, or other specific markets, which helps build expertise and consistency.

08:10

The speaker explains that trading soft commodities requires deeper analytical work involving factors like weather, crop cycles, exports, and global demand, which influence prices differently than other markets. They note that some traders limit themselves to a few currency pairs or majors, while they personally trade various instruments depending on market movement, mentioning indices, oil, and gold as examples.

09:15

The speaker analyzes the 15-second chart, focusing on volume point of control, support, and resistance levels. A large volume wedge surrounds the volume point of control, indicating price congestion. Key price levels include a strong resistance ceiling and support around certain price points. The market is expected to oscillate within these levels until a breakout occurs, requiring patience and attention to trading positions.

10:10

Shifting to the one-minute chart, the analysis shows a strong support platform currently being tested. The speaker discusses potential short positions if the price breaks below this support but questions the risk-reward ratio. The likely outcome of a short position is further congestion shortly below the support level, which would limit profit potential while risking significant points on the upside. The conclusion is that such a trade does not present a reasonable return due to the heavy volume and congestion at those price levels.

12:08

The speaker analyzes currency futures, focusing on the euro’s recent rise against the dollar. They highlight the volume point of control and the use of currency strength indicators, which are valuable tools across various trading instruments. The euro showed strong volume and upward movement but also signs of weakening, such as a wick on the last candle, suggesting an imminent pause or pullback. Additionally, the euro appears overbought on the five-minute timeframe, reinforcing the expectation of a potential trend pause or correction.

13:34

The speaker analyzes a significant spike in volatility related to Brexit, noting massive trading volume and market makers driving the market higher. This spike indicates a potential market congestion or reversal. The volatility signal suggests price action will likely trade within the range of the large volatility candle for some time. Andrew Bailey’s comments about negative interest rates may have influenced this market behavior.

14:43

The discussion explains the concept of buying volatility, which means trading on the expectation of increased market movement. Volatility can be bought or sold similarly to currencies, indices, or commodities depending on market outlook. The speaker clarifies currency pair notation in futures markets, emphasizing that pairs like CAD/USD and USD/JPY are quoted in ways that reflect dollar strength or weakness across the currency matrix, providing insight into overall market trends.

16:26

The speaker explains how to interpret volume point of control (VPOC) in a 15-second chart, using oil as an example. The VPOC moves dynamically as volume builds and shifts, rather than being fixed. This movement indicates changing market interest and volume accumulation, reflecting how price and volume interact in short timeframes.

17:35

The volume point of control adjusts as volume areas expand or contract, signaling market congestion or buying activity. The trend monitor remains red but may change if buying continues, showing how volume price analysis (VPA) provides rapid insight into insider activity and potential market direction.

18:27

On the one-minute chart, high volume candles signal strong buying or stopping activity, confirming interpretations from the 15-second chart. Volume and price agreement or disagreement helps anticipate market moves. Although an immediate reversal isn’t certain, the presence of strong buying suggests possible congestion or a forthcoming reversal.

19:33

The trend monitor’s color changes on multiple timeframes indicate shifts in market sentiment, with darker reds and blues signaling potential reversals. The five-minute chart shows significant volume after a price waterfall, suggesting either congestion or reversal. This highlights the importance of watching volume and trend monitors across different timeframes.

20:34

The speaker emphasizes the power of the indicator for managing trades, advising to take profits when volatility triggers occur while leaving some position open to capture reversals. The trend monitor’s color transitions—from bright red to darker hues and eventually blue—reflect evolving market sentiment and help traders anticipate changes.

21:37

The trend monitor does not always follow a fixed color sequence but generally signals sentiment changes effectively. The 15-second chart provides an early warning for market shifts, allowing traders to prepare. The trend monitor also guides decisions during congestion phases, helping traders maintain positions with confidence.

22:30

The speaker explains the common trader mistake of panicking and closing trades too early, which leads to missing out on larger profits as trends continue. They emphasize that losses are inevitable in trading but should be kept small and offset by bigger wins. The trend monitor tool was developed to help traders stay in trades during minor congestion phases and manage emotions that cause premature exits.

23:28

The discussion highlights that the instinct to close profitable trades early is deeply ingrained in human nature, rooted in evolutionary survival mechanisms. The trend monitor is designed to provide confidence and discipline, especially when used across multiple time frames. An example is given showing a rally with rising prices but falling volume, which signals potential weakness in the move.

24:28

The analysis continues with the observation that volume is declining as prices rise, which is a cautionary sign. The speaker also considers external factors like currency strength, noting some buying pressure in the dollar which is unfavorable for commodity price continuation. The market shows signs of pausing and minor resistance, indicating uncertainty about further upward movement.

25:28

There is a focus on key resistance levels, particularly a strong zone about 40 cents higher in the oil price that is likely to cause congestion or slow price advancement. Volume point of control and other volume clusters are highlighted as significant barriers. The analysis across multiple time frames from three to ten minutes confirms the presence of strong resistance and potential for price congestion or reversal.

26:17

The speaker reviews longer time frames, including daily charts, noting that fundamentals for oil remain weak with supply management efforts by OPEC having limited effect. The price is trading near key volume levels and shows limited momentum for significant moves. Despite this, intraday trading opportunities remain viable by focusing on the technical charts rather than broader market fundamentals.

27:19

The commentary concludes that oil prices are range-bound with no strong directional bias, but traders can still find setups by closely watching intraday price action. There is a brief mention of rising volatility in the VIX, suggesting potential market movement in indices. The speaker prepares to review faster charts and transitions the discussion to another presenter for further analysis.

28:28

The segment discusses initial market activity during a physical trading session, highlighting a large influx of traders and a rising market price. Despite the upward trend, volume bars were falling, indicating weakening momentum. The presence of a strong resistance level prevented the price from advancing further, signaling that the market was not likely to continue rising as traders might have expected.

29:27

The market exhibited choppy and volatile behavior, characterized by topping patterns and unpredictable movements. When the price eventually fell, volume increased, confirming the move’s legitimacy. Traders were advised to seize opportunities quickly and exit fast due to the uncertain environment. Price action was interacting with support and resistance levels, but less precisely than usual, reflecting the current unstable market influenced by external factors like the virus and the US presidential election.

30:38

The discussion shifts to investor behavior and the volatility index (VIX). It highlights how the cost of call options for November is rising as market uncertainty grows. When markets are booming, buying calls as insurance is cheap because reversals are deemed unlikely. However, current conditions suggest that option prices are increasing due to heightened expectations of market volatility.

31:12

The discussion focuses on market volatility expected around the presidential election, which makes insurance through options expensive. Investors are responding by selling some shares to avoid high costs while waiting out the market turbulence. The calls bought by some investors help offset portfolio losses during this period.

32:16

The speaker touches on the complexity of calculating the number of options needed to hedge against market reversals but emphasizes the usefulness of Volume Price Analysis (VPA). VPA helps traders recognize recurring patterns and anomalies in price and volume, making trading decisions more confident and less influenced by emotions.

33:18

Attention shifts to monitoring the YM index and upcoming political events, such as the Biden-Trump debate, which could impact markets. Current observations show weak momentum and reduced volume, indicating a congestion phase in the market, consistent with expectations during uncertain periods.

34:10

The speaker discusses a small but tradable rally visible on the 15-second chart, examining movements in the YM and other indices. They highlight the rising volatility as indicated by the VIX across multiple timeframes, which signals increased market activity. Using a volatility trigger and trend monitor indicators across various timeframes, the speaker notes expected sideways congestion on the 5-minute chart. They explain that the recent price move was enough to shift market sentiment away from the volume point of control, making it tradable especially on short-term charts like the 15-second and Renko charts. The Renko optimizer tool is demonstrated, showing how it adjusts brick sizes to match different timeframes for optimal trading signals.

36:02

The speaker explains how to determine the optimal brick size for Renko charts, using the YM index as an example. They show calculations for brick sizes across different time frames—30 seconds and one minute—resulting in bricks worth $50 to $100 each. Multiple time frames provide perspective on market conditions, and trend dots complement the bricks by closely tracking price action, indicating potential trend reversals or congestion phases.

37:11

Trend dots on the Renko chart respond to price action by changing color and position, signaling reversals or congestion. The trend monitor offers a longer-term perspective, assessing whether congestion signals an actual trend change or just temporary pauses. It adjusts colors to indicate the strength and validity of trends, helping traders distinguish between true trend shifts and normal market fluctuations.

38:07

The brick size is dynamically optimized for the trading instrument and session, removing guesswork. This size can change throughout the session based on market momentum; if activity slows, brick size decreases. This adaptability reflects the market’s nature as a living entity that speeds up and slows down, which is uniquely captured by Renko charts compared to time-based charts.

39:05

Renko bricks form independently of time, based on price movement rather than fixed intervals. The time to form each brick varies with market speed, sometimes forming very rapidly or slowly depending on momentum. In slower market phases, especially near session close, bricks form more sluggishly and may have different values. Volatility and volume indicators align with Renko bricks, which smooth out market noise and reduce whipsaw effects, making them effective for trading volume price analysis (VPA).

40:09

The speaker discusses the advantages of combining a non-time-based chart with volume price analysis and various indicators for effective trading, including the use of tick charts. They note a market downturn linked to a rising VIX Fix, indicating increasing volatility and a bearish outlook for equities. The speaker then mentions taking a break for food and walking their dog, while directing viewers to find all trading indicators on quantumtrading.com. They also reference multiple trading platforms used throughout the day, including NinjaTrader, TradingView, and TradeStation, highlighting integration options with Interactive Brokers.

41:12

The speaker discusses using TradeStation alongside TradeStation Securities for advanced charting and brokerage advantages, highlighting the powerful radar screen for options. They announce plans to transition to TradingView next month, where all additional indicators will be integrated and available for free to those with the full TradingView package. Following this update, the pricing will be aligned with the MT45 price.

42:03

The Quantum Trading Education site offers a comprehensive forex trading program with 200 hours of video content covering trading psychology, fundamental analysis, relational analysis, and technical analysis including volume price analysis (VPA) and Wyckoff methodology. The program also includes access to a trade room. Additionally, Anna Cooling’s site provides forecasts, analysis, and books available in Kindle and paperback formats.

43:03

The presenter thanks viewers for attending, invites questions via email, and mentions upcoming market events such as the Trump-Biden debate that may impact markets. They remind viewers of the next webinar session scheduled for the following week and provide a closing farewell.