How to trade stocks using volume price analysis

How to trade stocks using volume price analysis

00:07

Introduction and trading disclaimer

00:07

The session begins with a welcome to the audience, focusing primarily on the US markets. The host, Anna, along with David, introduces the session and emphasizes the importance of the disclaimer about the risks involved in trading. Viewers are reminded not to trade with money they cannot afford to lose.

00:43

Market overview and upcoming holidays

00:43

The speaker discusses the current market status, noting that markets are generally up. They remind viewers that tomorrow is Armistice Day, also known as Memorial Day, which will affect market operations. Specifically, some markets in the United States, like the bond market, will be closed, while stock markets are expected to remain open. The forex market will continue its sessions, although France will observe a public holiday.

01:22

Bond market and inflation concerns

01:22

The segment discusses concerns in the bond market following a 30-year bond auction, highlighting pessimistic reactions. Recent inflation data, including the PPI and CPI for the US, have come in worse than expected, prompting President Biden to emphasize inflation as his top priority. This puts pressure on the Federal Reserve to take action. Additionally, there is uncertainty surrounding Federal Reserve Chair Jay Powell’s tenure, as his reappointment is under consideration, potentially affecting market dynamics.

02:36

Fed leadership and monetary policy outlook

02:36

There are rumors that the current Federal Reserve chair might be replaced, with Lael Brainard as a strong candidate. Despite her appointment potentially not changing the Fed’s overall stance, the institution has maintained a dovish approach, aiming to keep interest rates low to support the economy and stock market despite rising inflation. Market conditions are currently unstable, with major indices like the Dow and S&P down and the volatility index nearing a critical threshold.

03:44

US stock indices performance update

03:44

The market is showing signs of nervousness. The Nasdaq has declined modestly by 204 points, which is not significant. The Russell index is more notable, having been in a prolonged consolidation phase for months before a recent dramatic breakout.

04:15

Evergrande bankruptcy and market impact

04:15

The segment discusses a recent market pullback linked to the official bankruptcy of Evergrande, China’s largest property company. It explains how such a significant default affects global markets, including the US stock market, due to the interconnected flow of money across borders and assets. The speaker also questions whether this event will lead to widespread impacts or if the market will continue following its usual seasonal patterns as the holiday season approaches.

05:32

Seasonal market trends and Santa rally

05:32

The speaker discusses the traditional end-of-year market rally, noting that despite some pullbacks and corrections, there is a strong determination to keep the positive momentum going. They recall that in 2018, the rally failed due to the Federal Reserve raising interest rates in December, leading to a market collapse. However, a strong rebound occurred after the Christmas holiday, setting the stage for a significant bull market. The speaker emphasizes the importance of considering multiple factors including seasonality and interest rate expectations, highlighting the current period as particularly interesting for traders. The segment concludes by introducing the topic of VPA (Volume Price Analysis) signals to be discussed.

07:11

VPA signals and Tesla analysis

07:11

The discussion begins with an introduction to the VP8 methodology, which analyzes price action, volume, support and resistance, candle patterns, and multiple time frames. The speaker references a previous analysis from October on Tesla, highlighting warning signs seen in weekly, daily, and monthly charts. These signs included unusual candle formations and volume patterns that suggested potential weakness despite Tesla’s strong run-up.

09:03

The analysis focused on a high-volume volatility candle followed by a shooting star pattern, indicating selling pressure and caution. Despite initial criticism of the forecast, the speaker emphasizes patience, comparing Tesla’s momentum to an oil tanker that takes time to change direction. The monthly chart showed rising prices but declining volume during a period of high market liquidity, signaling a potential disconnect between price and genuine market strength.

11:24

The segment details specific candle patterns like spinning tops and evening stars that often precede reversals when combined with volume signals. Additionally, recent news about Elon Musk considering selling shares due to potential new taxes on unrealized gains is noted, alongside his brother’s substantial stock sale. A significant gap down and a large bearish candle followed, reinforcing the need for corrections and pullbacks as natural parts of the stock market cycle.

13:41

The speaker explains that market movements reflect the collective actions of many traders and investors, highlighting how profit-taking near round numbers like $1,000 can trigger pullbacks. They caution against jumping into trades out of fear of missing out (FOMO) without understanding candle signals and support/resistance levels. The recent price dip saw buyers step in at key levels, showing that the correction might be a healthy minor blip rather than a trend reversal. Ultimately, the validity of this recovery depends on upcoming volume and price action.

16:01

Ford stock technical analysis

16:01

The speaker discusses trading and investing in stocks, emphasizing the importance of allowing time for strong signals to develop. They introduce Ford stock as an example, noting its significant price drop to four dollars and highlighting how faster time frames can show quicker developments. The importance of checking levels on faster time frames, especially around round numbers and significant points on the charts, is stressed as key to understanding pullbacks and re-entry opportunities.

17:13

Using the 10-minute chart for Ford, the speaker examines recent buying activity around key levels like 990 and just under 1000, which are significant due to automatic buy orders at round numbers. They explain that pullbacks and corrections, even in popular stocks like Tesla, are opportunities to buy if volume and price patterns align. A recent deep hammer candle with good volume is noted as a positive volatility indicator despite the price not moving far.

18:25

The discussion continues on Tesla’s price action, which broke through resistance at 1060 but struggled to surpass a key camarilla third level on the 10-minute chart. The volume remained average, with the price hovering around volume point of control near 1060 and resistance at 1050, both important round numbers. If Tesla cannot break through these levels due to insufficient volume, the speaker identifies 900 as a potential low to watch on shorter time frames.

19:37

On a longer-term scale, Tesla’s volume point of control is as low as 700, indicating potential for a deeper retracement, though not guaranteed. The speaker reiterates that corrections and pullbacks can present buying opportunities. They also share news that China Evergrande met a bond payment deadline, suggesting some stability and the possibility of continued market activity. The segment concludes with a reminder to stay attentive to key levels and news events.

20:42

Crypto and gold market commentary

20:42

The speaker discusses briefly avoiding a detailed look at Finviz, mentioning an interest in Riot, a Bitcoin miner. They highlight Bitcoin’s strong market performance as an inflation hedge amid market fears. The analogy of the gold rush is used to explain how suppliers of tools made more money than miners, relating this to Riot’s role in Bitcoin mining. The chart of Riot looks promising and worth monitoring.

21:47

The speaker examines Riot’s monthly chart, noting its drop from 206 to near zero but now showing interesting volatility within a certain range. They plan to track its performance relative to Bitcoin. The speaker also explores Finviz’s screener and volume filters, mentioning a need to improve its setup. They note the screener’s ability to sort by candlestick patterns, though the current definitions, such as spinning white tops and shooting stars, are not entirely satisfactory. They consider upgrading to a paid version for better customization.

23:35

Finviz screener and pattern analysis

23:35

The speaker reviews their original stock search on Finviz, focusing on patterns such as shooting stars and cup and handle, particularly analyzing Ford. They explain their process of using Finviz to identify stocks based on multiple parameters and then using MarketBeat to gain a deeper understanding of market activity, including who is buying, short interest, and options market dynamics. The discussion highlights how retail options traders, especially in stocks like Tesla, can drive stock price movements by frequently buying call options.

25:35

The analysis shifts to a 10-minute chart of Ford, examining specific candlestick patterns that suggest market weakness. Although not a classic shooting star candle, the candlestick shows a wick at the top with falling volume, indicating selling pressure. The speaker notes that this pattern led to an immediate price reversal, supported by volume changes and candlestick wicks that hint at underlying market dynamics.

26:38

Further technical analysis on Ford focuses on support and resistance levels, particularly the Camarilla S3 level and volume point of control. The speaker points out that while wicks to the bottom of candles often imply buying support, in this case, there was little follow-through beneath those levels. A large doji candle with heavy volume preceded a further leg down, breaking key support, signaling increased selling pressure and potential for further declines.

27:40

The speaker emphasizes the importance of using multiple time frames to analyze stock movements, combining daily and faster charts to assess levels, candlestick patterns, and overall trends for better trading decisions. They conclude with a recommendation to use MarketBeat for a comprehensive summary of a stock’s status, illustrating this with Ford Motor Company’s profile, which helps consolidate various analytical insights into one accessible platform.

28:20

Hedge fund positions and Ford outlook

28:20

The speaker discusses the significance of 13F filings, which hedge funds, investment companies, and large holders like central banks must submit quarterly to the SEC, revealing their large stock holdings. The Swiss National Bank is highlighted as a major Apple shareholder with significant exposure to the U.S. stock market. Attention is drawn to the substantial institutional investments in Ford, noting its historic low stock price and the massive inflows of capital from these smart money players.

29:44

The speaker reflects on the impact of large institutional money entering the market, emphasizing that individual investors are at a disadvantage compared to fund managers with vast resources and better timing. A monthly chart of Ford’s stock reveals it fell to as low as $1.79, an extraordinary low for a blue-chip company. Recent volume spikes indicate a strong move upward, but subsequent price action shows a ‘shooting star’ candlestick pattern with declining volume, suggesting uncertainty about whether the rally will continue.

31:22

The discussion shifts to analyzing volume patterns on a slower timeframe, questioning whether Ford’s stock momentum will sustain. Historical price context is given, noting it is far from previous highs like the $200 IPO price of Riot. The speaker considers Ford’s potential to adapt to climate challenges and compete with Tesla in electric vehicles. From a volume price analysis perspective, chart signals such as shooting stars and two-bar reversals are important indicators that require time to confirm their implications for the stock’s direction.

32:32

Quantum Trading indicators overview

32:32

The speakers discuss their proprietary trading indicators available on platforms like MT4, NinjaTrader, TradingView, and TradeStation. Users can purchase indicators individually or as a package, with the package automatically updated to include any new tools developed. Currently, there are around 13 indicators on NinjaTrader and about 18 or 19 on TradingView, with an emphasis on volume indicators. They encourage questions from the audience and mention ongoing stock analysis.

34:20

The presentation shifts to a live demonstration on NinjaTrader, where the speaker reviews multiple US market indices. They aim to cover current market conditions and keep track of specific stocks like Ford, Riot, and Tesla. The environment is dynamic, and the speaker tries to address various topics while interacting with the audience.

35:38

US indices and trading strategies

35:38

The speaker discusses current trades across multiple markets, including YM, NQ, and ES futures, noting they are all moving downward in unison, providing straightforward trading opportunities. Patience is emphasized as crucial, especially during early market congestion and volatility. The trading session starts at 2:30 UK time, following an earlier Globex session. Trading Globex is valid and accessible, offering opportunities even before the main cash markets open. The volume spike at 2:30 is due to the cash market opening alongside Globex, but this does not diminish the tradability of Globex, which remains reliable and demonstrable.

37:16

The London Forex market opens at 8:00, marked by less choppy and more straightforward price action compared to when multiple markets run simultaneously. Electronic markets typically show less dramatic moves unless influenced by significant overnight news, such as major economic data from China, which can cause sharp price shifts. The timing of such news can affect market behavior differently across global time zones. The speaker disagrees with the notion that only cash markets should be traded, emphasizing the value and straightforward nature of trading electronic markets overnight in the UK timezone.

38:40

Volume, trend monitors, and Renko charts

38:40

The segment explains how bright red trend monitors indicate a market attempting to rally despite a downtrend. The market shows some buying interest and volume support but struggles to move higher due to resistance and weakness. Multiple attempts to rally fail, leading to continued downward pressure and congestion areas.

39:30

This section describes the presence of multiple wicks on candles with good volume, signaling price rejection at lower levels and potential support zones. The speaker compares price action on the Nasdaq 100 to similar patterns and discusses possible entry points for traders who missed earlier moves, emphasizing patience waiting for confirmation signals and volume.

40:22

Traders are advised to be patient when facing congestion zones and to wait for price breaks confirmed by volume before entering trades. Despite attempts to rally, the market remains weak and continues downward, providing favorable trading opportunities in current conditions.

40:49

The speaker introduces multiple Renko charts on different time frames, explaining how the Renko optimizer helps identify optimal settings for various instruments and times of day. This method provides a clear and effective way to trade by filtering price movements into meaningful bricks.

41:23

Details are given about the value of Renko bricks on different instruments, such as the YM and big Dow, highlighting potential profit per brick. The segment also describes the use of complementary indicators—trend dots and trend monitor—that track price action closely and provide early and confirmed signals of trend changes.

42:22

The trend dots indicator reacts quickly to price changes, signaling early trend shifts, while the trend monitor offers a more measured perspective. Together, they complement each other in identifying trend direction. The combination with volume price analysis (VPA) enhances trading decisions on non-time-based charts like Renko, which better reveal market momentum.

43:20

Non-time-based charts, such as Renko, display market momentum by showing how quickly bricks form depending on price movement speed, unlike traditional time-based charts. This ability to visualize momentum aids traders in interpreting market speed and strength more effectively. The speaker then transitions to discussing a multiple workspace setup for indices.

43:55

Multiple time frame trend analysis

43:55

The discussion begins with an analysis of multiple time frames on the Wyoming enqueue, highlighting a developing bullish trend indicated by the trend monitor transitioning from bright red to bright blue on shorter time frames. This signals a potential tradable move suitable for scalping, supported by a volatility trigger and significant volume influx.

44:57

The speaker notes a potential reversal in the trend, with the trend monitor yet to fully transition in color. Price is rising while volume is falling, accompanied by narrowing spreads, suggesting the move may not sustain strongly. Emphasis is placed on focusing trading efforts based on individual goals, such as scalping versus longer-term trades.

45:50

The analysis shifts to a 10-minute chart, observing a pullback marked by a wick formation and possible early buying signals, though volume data is limited. The perspective depends on the trader’s timeframe, with scalpers finding this a tradable opportunity while longer-term traders might view it as a minor correction requiring wider stop-loss settings.

46:36

Further volume analysis indicates falling volume during the price rise, which is atypical and suggests weak strength in the move. The speaker explains the principles of anomalous volume price analysis, emphasizing the importance of validation between price and volume for reliable trade decisions across different time frames.

47:32

Using volume price analysis helps traders maintain confidence and avoid premature exits by assessing market moves against volume trends. The trend monitor’s color transitions indicate potential shifts between bullish and bearish phases. The segment concludes by transitioning the focus towards other markets, particularly gold, noting a long-term bullish stance.

48:32

Gold price levels and market signals

48:32

During the UK and US market open, both gold and the dollar rose simultaneously, indicating an underlying market issue. Gold experienced high volatility, spiking to around 1870 before settling near 1850 with strong volume. A key resistance level at 1840, which had repeatedly held gold back in recent months, appears to be holding above this time, signaling a potential longer-term bullish trend. This stability in gold prices is also positively influencing silver. The segment concludes with a brief mention of transitioning to a trading platform and reviewing Tesla’s chart.

50:04

TradeStation scanner and market filtering

50:04

The speaker discusses the challenges of trading stocks compared to forex due to the vast number of instruments in stocks. They highlight the usefulness of TradeStation’s tools such as the market scanner, hot lists, and radar screen for filtering and identifying significant market movers. The radar screen provides live data on big daily gainers like Tesla, allowing traders to quickly analyze price movements and related news triggers.

51:29

The speaker demonstrates using TradeStation’s market scanner set to filter stocks based on RSI values above 50, emphasizing the importance of tools that handle large datasets efficiently. They mention several other powerful scanning and charting platforms like FinVerse, ChartSmart, and ShareScope, noting that some are free while others are paid, and that each platform varies in market coverage and bias toward US or UK markets.

53:10

The speaker transitions back to Anna, who shares her screen showing a one-minute chart to illustrate the concept of a shooting star candlestick pattern. This setup helps highlight specific price action movements relevant to technical analysis.

54:04

Minute chart volatility and support levels

54:04

The segment explains how the tick speedometer measures market activity by detecting noise and momentum, with green indicating high activity and red indicating quiet periods. The market moves inconsistently, resembling a living organism with fluctuating momentum. A shooting star candlestick pattern is highlighted, which functioned as expected by signaling a down candle followed by an attempted rally that encountered resistance marked by camarilla levels.

55:19

This part discusses the importance of reading candles, volume, and support/resistance levels together. It emphasizes that traders can use various methods to mark these levels, such as Fibonacci, moving averages, horizontal lines, or channels, but the speaker prefers horizontal price-based and volume-based lines. These combined levels often indicate price reversals, as seen in the example where price action hits resistance and then moves sideways with declining volume.

56:30

The segment describes a downward price movement starting slowly with low volume, then gaining momentum into a sharp decline or ‘waterfall.’ Support and resistance zones on the chart help predict price direction. The camarilla method, incorporating elements of Fibonacci, is noted for its effectiveness. A large candle with high volume triggers volatility, meaning the price moves outside the average true range, serving as a warning for a likely price reversal within the candle’s spread.

58:09

Volatility candles can act as traps for traders who hold positions expecting a continued move, but the price reverses unexpectedly. The price approaches the S3 camarilla level, moves sideways, and attempts to break it with moderate volume. However, the subsequent drop in volume signals a weak breakout, causing the price to revert back to the S3 level, which often gets tested multiple times with consolidation around it.

59:33

The analysis continues on the minute chart, highlighting how volume anomalies and candle spreads indicate potential reversals. Price repeatedly tests the S3 level with increased volatility and volume. A green tick speed indicator shows heightened market activity. Eventually, the price manages a breakout, though it faces the next resistance level, S4, with volume point of control (VPOC) bands marking dynamic volume-based support and resistance zones that shift over time.

01:01:16

The final segment explains how volume point of control and camarilla levels act as strong support and resistance on multiple time frames, especially on the hourly chart where these levels remain valid for the week. Price action on shorter time frames like the minute chart often stalls at these key hourly levels. The example shows a breakout influenced by the combination of R3 camarilla and VPOC, which explains the resistance and struggle observed on the minute chart.

01:03:05

Evergrande bond payment update

01:03:05

The discussion begins with an analysis of slower time frame levels in trading, emphasizing their precedence over faster time frames. Attention shifts to Evergrande’s financial struggles, noting efforts to gather enough funds to pay interest on its loans. The segment concludes with a transition back to David and a preview of the next session, which will focus on the forex market, highlighting the Japanese yen as a key currency to watch due to its dual role as both a risk-on and risk-off indicator.

01:04:19

Japanese Yen as market sentiment indicator

01:04:19

The speaker discusses the relationship between the Japanese yen and market sentiment, noting that when the yen is sold off, the market is generally expected to be positive, but this correlation doesn’t always hold. Historically, the euro-yen pair correlated strongly with the S&P 500, but this relationship has weakened. The yen remains a useful indicator of market sentiment. The session concludes with a handover to David and a reminder about an upcoming forex session.

01:05:45

Market recovery and copper analysis

01:05:45

The speaker analyzes recent market movements, noting limited price changes and recovery following news events. They examine multiple time frames and different assets, including Apple and copper, highlighting reversal signs and volume patterns. The discussion emphasizes the Volume Price Analysis (VPA) technique, explaining that market reversals are gradual processes influenced by momentum and require significant effort from market makers to change direction. The example of copper is used to illustrate how volume and price action interact over various time frames, demonstrating that VPA principles apply consistently regardless of chart duration.

01:07:21

Volatility triggers and trading advice

01:07:21

The speaker discusses a volatility trigger seen on a 10-minute chart accompanied by significant volume, suggesting either a full reversal or congestion is likely. They advise traders who are short and profiting to close out or reduce their positions to avoid emotional and financial strain during uncertain moves, recommending leaving only a small part of the position open to capture potential further gains.

01:08:13

When a volatility-triggered snap move works in your favor, it’s best to take profits and wait for the market to clarify direction. The speaker highlights observing multiple volatility candles with volume confirming buying activity and retracements, but notes that congestion often develops, causing difficulty and frustration for traders holding positions through these phases.

01:09:03

The speaker explains that volatility triggers usually result in reversals or congestion about 80-90% of the time, though exceptions exist where price continues strongly. They point out how large volume indicates the involvement of big operators or market makers confirming moves. Finally, they briefly mention where to find related trading software and platforms, noting that each has slight differences.

01:10:00

Quantum Trading software and education

01:10:00

The speaker explains that customers who purchase the full package receive all future indicators free of charge, benefiting long-term users who have stayed for many years. Customers who buy individual indicators can always upgrade to larger packages or education programs and receive credit for their previous purchases, regardless of how long ago they bought them.

01:10:52

The company has released many indicators on TradingView, including a cryptocurrency strength indicator and a radar panel. They are currently focusing on developing indicators for NinjaTrader (both version 7 and 8), aiming to make them available on the Market Analyzer feature. Customers who previously purchased the full NinjaTrader package will receive these upgrades free of charge.

01:11:49

The development team is simultaneously updating and adding features to indicators across multiple platforms, including MT4/5. Their current workflow involves transitioning from TradeStation to TradingView, then to NinjaTrader, and finally back to MT4/5. Information about the education program is available at quantumtradingeducation.com, which has attracted many stock traders despite its forex focus.

01:12:15

Forex market importance and funded program

01:12:15

The forex trading program is central to understanding the market because it acts as the cash gateway, facilitating the movement between assets through currency transactions. The program highlights how forex is integral to asset swaps, with currencies like the yen, dollar, and Swiss franc closely linked to market risk. Many stock traders are now recognizing the importance of forex, as monitoring currency indices can provide insights into broader market trends.

01:13:13

The forex trading program is extensive, featuring over 450 lessons and 250-300 hours of video content, along with tools, indicators, and a supportive VPA room led by the instructors. Additionally, a funded trading program allows students to trade with up to two million dollars of the company’s capital, offering a risk-free opportunity to apply their knowledge. Relatedly, all educational books are available on amazoncooling.com in both Kindle and paperback formats, boasting thousands of positive reviews.

01:14:08

Books, resources, and session closing

01:14:08

The speaker expresses gratitude for the high ranking in the Amazon catalogue and appreciation for the audience. They mention that all relevant links are provided and highlight recent posts, including one about Tesla from the morning. They also announce the next session on forex trading scheduled for 7:45 the following morning.

01:14:38

The session concludes with thanks to the viewers for attending, wishing them well for the remainder of the trading day, and a reminder to join again tomorrow morning.

By Anna Coulling – creator of volume price analysis