How to use support and resistance levels to define entries and targets trading forex

How to use support and resistance levels to define entries and targets for forex trading.

00:00

Introduction and audio check

00:00

The session begins with a warm welcome to the forex webinar attendees. The host confirms audio quality by asking participants to acknowledge if they can hear properly. After ensuring everyone can hear, the host briefly mentions that they will be discussing the forex market. Before diving into the content, attention is drawn to an on-screen disclaimer.

01:04

Trading risks and volume price analysis overview

01:04

The speaker emphasizes the risks involved in trading, advising not to use money that cannot be afforded to lose. They introduce the audience to volume price analysis, a methodology used to analyze charts and predict likely market movements. The discussion highlights the complexity of forex trading, noting that fundamental data and releases impact currency pairs. Additionally, the speaker mentions incorporating related markets into analysis to better understand potential price actions.

02:08

The speaker explains the interrelationship between core capital markets—forex, equities, bonds, and commodities—and their influence on one another. They focus on observing activities outside the forex market to gauge their potential effects on forex price action, helping traders anticipate market movements more effectively.

02:41

Market sentiment and related markets

02:41

The segment explains the concept of market sentiment, distinguishing between ‘risk on’ and ‘risk off’ moods which affect asset prices like equities, bond yields, and commodities, and influence currency pairs. It introduces volume price analysis (VPA) and a 3D approach to forex trading, referencing resources such as books and digital sets that provide worked examples. The discussion clarifies that unlike stocks, forex does not have a central exchange, so exact volume figures are unavailable. Instead, traders rely on tick volume, which measures market activity and participation to assess whether price moves are genuine based on the presence of real buyers and sellers.

04:13

Volume price analysis concepts and candle patterns

04:13

The speaker discusses analyzing the market using tick volume, price action, and candle patterns such as bearish and bullish engulfing and tweezer tops and bottoms. They emphasize the importance of support and resistance levels, both price-based and volume-based, as crucial elements in volume price analysis (VPA). The focus is on how understanding these concepts can help traders identify opportunities to join trends rather than chasing price movements, which often leads to disappointment.

05:22

Further explanation is given on using support and resistance to pinpoint optimal points for entering trades, combining volume and price data to improve the probability of success. The speaker highlights the challenge traders face with price movements being ahead of them and the need for a comfortable strategy. They mention employing various methodologies, including custom tools and standard indicators, to assess the likelihood of profitable trades. Once foundational knowledge is established, traders can incorporate additional tools like moving averages for enhanced analysis.

06:24

Use of technical indicators and multiple time frames

06:24

The speaker discusses various technical indicators like Elliott Wave and Bollinger Bands, highlighting that they serve different purposes and can be used in different ways. They mention avoiding standard indicators on their charts, although sometimes using exponential moving averages, especially the 200-day moving average, which is commonly referenced by financial journalists. The speaker also notes the use of proprietary indicators developed by their team and emphasizes the importance of blending different types of indicators. Additionally, they stress the significance of considering multiple time frames when analyzing markets, beyond just the chosen time frame.

07:26

Currency strength indicator and market sentiment

07:26

The speaker introduces the currency strength indicator, which measures the relative strength and weakness of currency flows in the market. They emphasize its use for understanding current market conditions and recent trends, particularly through the hourly view that offers a snapshot of recent and potential upcoming movements. The market sentiment in recent days and weeks is described as uncertain and complex, not clearly risk-on or risk-off. This uncertainty is reflected in inconsistent flows into safe haven currencies. The speaker notes that this market condition is likely to persist in the coming weeks or months until there is a clear resolution, such as a significant market correction or continuation of the current bullish trend.

09:29

Currency matrix and strength of trend indicators

09:29

The speaker discusses market indecision and introduces the matrix, an indicator that compiles data to rank currency pairs based on recent strong moves. The matrix provides important insights into market strength and trends.

09:55

Currency array is explained as a strength of trend indicator that is more considered than the matrix, which reacts more quickly to price action. The market discussed is characterized as a mean reversion market where prices often extend and then revert, creating tradable waves.

10:32

The speaker contrasts forex markets with equity markets, noting that equity markets have a long bias while forex pairs, like the pound-aussie, often experience rollovers that provide trading opportunities.

11:03

The heat map indicator is introduced as a sophisticated tool that ranks currency pairs by relative strength and weakness across multiple time frames. Although not frequently featured due to time constraints, it is highly valued in the educational program.

11:35

Quantum trading education and funded forex program

11:35

The funded forex program at quantumtradingeducation.com allows students to trade using the company’s capital after paying a one-time entry fee. The program includes a conservative and strict evaluation stage lasting up to a year, designed to help students practice risk and money management without risking their own funds. This setup provides an opportunity to apply learned trading concepts in a real environment while minimizing personal financial risk.

12:40

Economic calendars and inflation focus

12:40

The speaker reviews recent news and economic calendars, shifting focus from Forex Factory to other sources due to differences in how events are ranked by impact. They explain the color coding system for impact levels (red for high, yellow for medium, orange for low) and emphasize the market’s current heightened sensitivity to inflation data, which is driving reactions even if central banks may weigh these releases differently.

13:54

The discussion continues on the importance of inflation data in market reactions, noting that while central banks may not prioritize certain inflation releases, the market still closely watches them. The speaker introduces Financial Juice as an alternative calendar that sometimes ranks events, like the Canadian CPI, as more important than other sources do. They also highlight the flexibility of this calendar, which allows users to select specific countries and focus on key economic releases relevant to their trading interests.

15:32

The speaker demonstrates how to customize economic calendars by selecting relevant countries such as Switzerland and the UK, aligning with the trader’s focus. They underline the current market and media narrative centered on inflation rates and stress the importance of understanding these figures for currency traders. The segment concludes with a brief mention of using a currency strength indicator and heat map on the hourly timeframe to assist trading decisions.

16:34

Currency strength trends and trading pairs

16:34

The speaker analyzes recent market activity, highlighting strong buying of the euro and significant selling of the New Zealand and Australian dollars. They discuss the concept of mean reversion, noting that while some currency pairs have been steadily climbing or falling, they eventually reach extremes before reversing, often leading to increased volatility. The British pound’s movements are described as more measured with higher highs and higher lows. Attention is also drawn to the matrix indicator, which ranks currency moves on an hourly chart to signal the strength of a trend. Values in the low 20s or below indicate little activity, while higher values suggest stronger moves. The indicator has been updated to better assess these values and will be integrated into other trading tools.

19:09

New Zealand dollar and dollar index analysis

19:09

The speaker discusses the New Zealand dollar’s significant decline, highlighting it as the most heavily sold currency recently. Despite this, the New Zealand dollar has been in a steady upward trend against certain currencies. The focus shifts to the US dollar index (Dixie), which has been falling sharply over the last few days. The speaker explains the use of the Camarilla pivot points, a price-based support and resistance indicator, noting a key break at the third level and the presence of volume support that halted the dollar’s decline. This combination of technical indicators provided a strong signal for a potential technical reversal, suggesting that despite the overall bearish sentiment towards the dollar, there might be an opportunity for a rebound.

20:55

Technical reversals and support resistance importance

20:55

The speaker discusses how the CFTC numbers indicate heavy selling of the dollar, leading to technical reversals at key levels on charts. Traders need to identify which levels signify reversals versus continuation of the primary bullish or bearish trend, relying on support and resistance analysis. Additionally, the speaker highlights a recent market feature observed just before the US cash session started, noting the significant liquidity and activity during the London/Euro session as context for interpreting these movements.

22:01

Cross pairs activity and liquidity during London session

22:01

The speaker discusses an unusual observation in the forex market where cross pairs dominated the top and bottom spots of liquidity and movement, unlike the typical dominance of major pairs like the euro dollar. They note that most traders prefer euro dollar due to its narrow spreads, which is crucial for scalping strategies. However, during the London session, even major pairs showed relatively low movement, with pound dollar and dollar yen lagging in activity despite the presence of US forex traders joining the market around 2:30 PM.

23:04

The discussion continues with a focus on the limited movement of major pairs such as euro dollar and dollar yen during the cash session, where typical pip movements are seen more in cross pairs. This presents a challenge for scalpers who aim for quick trades with small gains, as they must be patient for their preferred pairs to become active. The market is always moving, but timing and pair selection are critical, especially if the trader is not looking for long-term positions but rather short to medium-term trades.

24:02

Selecting currency pairs and trading session volatility

24:02

The speaker discusses the strategy of trading currency pairs, emphasizing the importance of choosing pairs that suit your trading timeframe and preferences. They explain that while spreads on cross pairs might be higher, these pairs can offer better trading opportunities. When building a portfolio of currency pairs, traders typically focus on a manageable number, such as 28 major pairs, rather than thousands like in stocks. During the London session, the British pound is the main focus, and traders select the most interesting pound pairs based on volatility and session activity.

25:05

The speaker highlights tools such as investing.com and program resources that help traders analyze currency pair volatility over different time frames. They mention preferred pound pairs like GBP/USD (cable), EUR/GBP, and GBP/AUD, noting that GBP/AUD can produce significant moves during crossover sessions. They avoid GBP/NZD due to less interest and note GBP/JPY as a sentiment-driven pair. Traders typically do not trade all four pairs simultaneously, as pairs may reach resistance points and pause, with market rotation often shifting when the New York session begins.

26:07

The discussion continues on market dynamics, noting how different trading sessions bring new participants and affect currency movements. The speaker references recent market trends, such as indices picking up after Monday before selling off and the dollar weakening slightly. They stress the importance of understanding these market behaviors and using indicators as tools to simplify decision-making. Without indicators, traders must piece together market information manually. The segment ends with a change of speaker planned.

27:06

Euro New Zealand pair overview and consolidation patterns

27:06

The speaker discusses the Euro New Zealand currency pair, noting that while the Euro is experiencing strong buying, the Euro Dollar doesn’t reflect this strength. This discrepancy is explained by the CSI and matrix indicators, which show that when lines move together, it often signals a consolidation or holding pattern rather than a strong directional move. Such patterns suggest limited opportunities for large gains but possible small profits.

28:06

The focus shifts to analyzing the New Zealand pair using five charts in the MT4 and MT5 platforms to identify trading opportunities and recent trends. The daily chart reveals that the Euro New Zealand pair has been consolidating, trading around the volume point of control, an important concept from market profile analysis that links price and volume to identify value areas. This consolidation phase suggests the pair is in a holding pattern before a potential breakout.

29:22

Volume point of control and market profile concepts

29:22

The segment discusses market conditions where price action is choppy due to lack of clear divergence, sentiment, or directional volume, causing frustration especially on faster charts. On slower time frames like daily charts, this manifests as a holding or congestion pattern with price moving up and down without strong direction. The speaker notes that even though individual candles like a large down candle suggest activity, the overall pattern remains range-bound and indecisive.

31:03

The focus shifts to the Euro/New Zealand currency pair, which has recently broken out of a congestion phase after three consecutive up days, although one day showed indecision with a doji candle. This breakout follows a failed breakaway attempt and a retest of the volume point of control. The speaker advises watching support and resistance levels for potential reversals and highlights the significance of this breakout in the context of recent price behavior.

31:38

Potential triple top and volume resistance on daily chart

31:38

The speaker explains volume resistance bands and shadows derived from price action around the volume point of control. The indicator highlights not only the volume point of control but also paints a histogram that shows the depth and duration of congestion in the price movement.

32:16

The volume bands mark boundaries between high volume nodes and low volume nodes. High volume nodes have wider histograms, while low volume nodes have very thin histograms. Price tends to move quickly through low volume nodes due to lack of volume support.

32:51

Low volume nodes act like soft cushions, allowing price to pass through quickly, whereas denser, high volume areas create resistance and slow down price movement. This volume cushion concept underpins volume support and resistance.

33:26

The chart may be forming a triple top, which could signal a potential reversal in the upward trend. This is a critical observation when analyzing daily charts and anticipating market behavior.

34:03

Despite a large price candle, the volume is relatively low compared to previous candles, suggesting weaker momentum for further upward movement. This volume discrepancy may indicate a stall in the price rise, especially when confirmed by slower time frame analysis and identified entry points.

34:47

Hourly chart analysis with camarilla levels and volume

34:47

The speaker analyzes a faster time frame chart, focusing on a volume band signaling a potential triple top and an objective for the trading pair. They compare this with the hourly chart, which features a camarilla indicator with two lines highlighting overextension. The daily chart showed a potential triple top and volume resistance, and these levels are also applicable on the hourly chart, though the hourly chart emphasizes volume more.

35:56

On the hourly chart, price movement stopped at the fifth camarilla level out of six, with the third and fourth being the most important. The volume histogram and volume price analysis (VPA 101) indicate a pause, as rising prices come with falling volume. The speaker stresses the importance of marking key levels on charts using tools like camarilla or Fibonacci. They highlight the power of combining volume and camarilla indicators to remove guesswork and anticipate reversals. These hourly and daily levels remain relevant for about a week, making them useful for swing trading.

37:48

Key camarilla levels and volume price analysis signals

37:48

The segment explains how price action interacts with multiple levels, including volume and price-based levels, and how these can signal potential entry points, particularly on the hourly chart. It discusses the challenges of interpreting volume profile analysis (VPA) across different time zones and trading sessions, emphasizing that volume variation is natural due to varying trader participation throughout the 24-hour market. The focus is on the relative volume changes rather than absolute values. Additionally, the segment highlights the importance of specific candlestick patterns such as two-bar reversals and bullish or bearish engulfing patterns occurring near key levels like the third resistance (R3), which can be strong signals in forex trading.

40:08

Two-bar reversals and candle pattern trade signals

40:08

The speaker explains how the third and fourth levels act as significant support and resistance in trading, supported by volume. Using an hourly chart, they highlight a two-bar reversal pattern accompanied by strong volume, which might initially suggest a price reversal. However, further price action and volume behavior must be considered before making trading decisions.

41:06

The discussion continues on the importance of patience and confirmation when trading key levels. After an initial reversal with rising volume, a bullish engulfing candle with high volume signals a potential upward move, emphasizing not to act on a single signal. The speaker advises traders, especially beginners, to adopt a conservative approach and carefully observe volume and price action near critical levels before entering trades.

42:13

Hourly chart volume context and trend progression

42:13

The speaker discusses expectations around trading volume, noting that a drop in volume is normal and indicates no dramatic market changes. They observe price movement on the hourly chart, highlighting a down candle with low volume as an anomaly followed by a gradual price increase, contextualized by the Asian Pacific trading session and currency movements, including the euro rising and New Zealand dollar falling.

43:08

The analysis continues with the price reaching and breaking a key level (the fourth), then retesting it. The speaker explains that these levels are refreshed daily and are used alongside Renko charts and shorter timeframes like the five-minute chart to inform trading decisions.

43:40

Renko chart use with camarilla levels for entries

43:40

The speaker explains the use of Renko charts in trading, highlighting that Renko is independent of time and focuses on price movement through fixed brick sizes. They note that while Renko is often used alongside five-minute charts, it clearly shows market trends and pullbacks. The daily chart indicates a strong upward move with minor pullbacks, which is typical in trending markets.

44:11

The discussion shifts to using the R3 level and trend dot indicators on shorter time frames. The speaker points out a trend that began the previous afternoon, noting congestion on the hourly chart where price movement is limited near key levels. These levels act as retests or support, similar to how traders use Fibonacci retracement levels like 50%, 61.8%, and 23.6% to identify potential entry points. The market shows a pattern of moving higher, pulling back slightly, and then continuing upward.

45:16

The speaker emphasizes the importance of combining trend indicators such as trend dots and trend monitors with key price levels to increase confidence in trade entries. They mention adjusting the chart by adding the Camarilla levels for additional reference, reviewing where the volume profile has shifted, and considering the Arse-Free indicator, which helps identify significant price zones and support/resistance areas.

45:52

Volume point of control and price action confirmation

45:52

The speaker discusses the dynamic nature of the volume point of control (VPOC) on the Renko chart, highlighting how multiple VPOCs at different levels influence price movement. They note increased clarity on the 15-minute chart, mentioning the R3 resistance level and volatility signs such as weak candles and wicks, indicating weakening momentum as the price approaches key levels identified on the daily timeframe.

46:59

The daily levels have been surpassed, now acting as support or resistance for retests during the session. The price has moved through hourly and daily levels, suggesting continued upward momentum for the day until the next resistance at R6. The speaker explains the importance of revisiting these levels as they refresh every 24 hours on faster timeframes and briefly introduces a shift to discuss the Euro/New Zealand currency pair before handing over to a colleague.

48:05

Euro Yen longer term bullish trend analysis

48:05

The discussion begins with an analysis of the euro-yen currency pair on the daily chart, highlighting a strong primary uptrend despite some congestion near the volume point of control. The speaker notes minor interruptions but emphasizes the bullish momentum and a longer-term target of reaching 135 and beyond.

49:13

The analysis continues by examining the weekly and monthly charts of the euro-yen pair, which largely confirm the ongoing uptrend. The key resistance level is identified around 136, with expectations that surpassing this level will open the path to low volume regions up to 150 and beyond. The focus remains on volume-driven moves supporting the upward trend in the longer term.

50:25

Live account sentiment trading update and performance

50:25

The speaker discusses a live micro account trading yen and dollar pairs based purely on sentiment. The account has been performing well, gaining about 500 pips recently, with a goal of reaching $1800 by the end of the year, effectively doubling the account. The focus is on sentiment trades rather than currencies like the euro or pound.

51:53

A detailed observation of US indices volume reveals a red flag due to low volume on large up candles, indicating a weak market likely to roll over. This suggests an impending reversal rather than sustained upward movement, supported by insufficient volume on recent price increases.

52:19

The market correction appears technical as heavy selling is not materializing, so the speaker is waiting for a clearer reversal signal before re-entering trades. The account strategy involves scaling into positions across five or six currency pairs, taking profits incrementally. So far, the strategy has yielded around 350 dollars and over 3,000 pips this year.

53:15

The speaker introduces a new indicator, a time-adjusted Renko chart combining two indicators to better match Renko price action with time-based charts. The integration aims to improve analysis by resolving issues in comparing Renko bars with traditional time charts, with plans to launch it soon after finalizing minor technical details.

53:44

Time adjusted Renko and accumulation distribution indicator

53:44

The speaker explains that Renko charts operate independently of time, meaning their price action is not directly tied to traditional time scales. However, when switched to a time-adjusted mode, Renko charts reflect market sideways movements through clear support and resistance levels, moving higher or lower in line with price trends.

54:14

The accumulation distribution indicator, familiar to NinjaTrader users, provides a visual representation of market strength by showing levels tested multiple times, indicating strong support and resistance. The speaker mentions using this alongside other tools like an array and a currency matrix to analyze market conditions.

54:43

The speaker describes utilizing multiple currency heat maps with different time frames, ranging from one hour to one week, which can be customized according to trading style. These heat maps help quickly identify trends across various currencies, with options suitable for scalpers using very short intervals.

55:11

Currency heat map and tradestation global platform

55:11

The speaker presents a live overview of currency markets, focusing on the US dollar’s bullish trend throughout the morning. They highlight strong trading activity across major currency pairs, including the Australian dollar, British pound, Canadian dollar, euro, New Zealand dollar, and Swiss franc. The decline of the Swiss dollar indicates strong buying interest in the US dollar.

55:45

The speaker explains the use of a trading platform’s radar screen, which displays linked currency futures symbols and intervals. This setup allows quick switching between different currency pairs and time frames, providing a powerful and efficient way to monitor and analyze market movements.

56:12

The speaker demonstrates how changing the time frame on the radar screen updates the displayed data automatically, using euro dollar on a five-minute chart as an example. They mention custom indicators developed for the platform that visually monitor trends within the radar screen, enhancing market analysis.

56:39

The speaker notes that trend indicators are shifting towards bullish sentiment on the one-minute euro dollar chart, as reflected by color changes in the trend dots. They mention a potential resistance at a volume point of control level, indicating a possible challenge for further upward movement in the short term.

57:05

The trading platform provides instant visual cues across multiple currency pairs, allowing rapid navigation. The speaker describes how Tradestation Global integrates with Interactive Brokers accounts, enabling seamless trading directly from the screen across various markets.

57:35

The speaker shifts focus to Nasdaq futures, showing multiple time frames on the radar screen with emerging bullish trends on shorter intervals like one and two minutes. They observe transitional color changes on intermediate time frames, while longer intervals remain stable, illustrating how trend momentum develops across different time scales.

58:03

Trend monitor and time and sales data interpretation

58:03

The speaker explains how sentiment trends develop from fast to slow markets, using various channels and a time and sales window that displays actual executed trades rather than spoof trades. Emphasis is placed on identifying large trade sizes, especially those above the ask or below the bid, as they indicate bullish or bearish sentiment. A recent large trade of 80 contracts injected significant momentum into the market, influencing price action.

59:27

The speaker shifts focus to global market sentiment, noting it has been bearish but choppy over the past few days. All three primary indices are roughly aligned, testing key volume points. They discuss monitoring volume signals, overbought and oversold conditions, and looking for directional cues using various timeframes on TradingView, including a four-hour chart on the CSI index to gauge slower market trends.

01:00:27

Global sentiment and commodity currencies outlook

01:00:27

The speaker discusses current market sentiment, noting strong buying of the dollar and yen, indicating weakness overall. The Swiss franc, typically expected to rise, is selling off, while commodity currencies are also being sold in the short term. The focus is on waiting for a market bounce and volume opportunities, with the VIX having spiked to around 21, signaling increased volatility. The dollar is still climbing, which is negative for sentiment and equities, so patience is advised before re-entering the market and building new positions.

01:01:18

The speaker plans to scale into new positions gradually and reviews multiple time frames on the CSI charts to inform decisions. Various chart intervals including 1, 5, 10, and 15 minutes are used to analyze the market, emphasizing the importance of multi-time frame analysis in trading strategy.

01:01:54

Multiple time frame CSI analysis and trading approach

01:01:54

The speaker discusses trading strategies focusing on currency pairs like the New Zealand dollar, Aussie, Swiss franc, and yen, highlighting oversold and rally conditions as opportunities for scalping and reversals. Emphasis is placed on choosing the right time frame and trading style, particularly advocating for longer-term positions held over hours, days, or even weekends rather than short-term 5, 10, or 15-minute trades. The approach prioritizes risk and money management with a limited number of pairs, aiming for consistent pip gains rather than large daily profits.

01:03:13

The focus is on building consistency in trading by regularly delivering pip gains over weeks and months instead of chasing immediate large profits. The speaker stresses that the amount of capital influences position size but the key is steady performance. The session concludes with the reminder that success in trading comes from consistency and risk control, not short-term earnings.

01:03:44

Indicator availability and quantum trading program details

01:03:44

The speaker explains where to find all the trading indicators on quantumtrading.com, covering platforms like MT4/5, NinjaTrader 7 and 8, and TradingView. They mention that the full package users will receive automatic updates with new or previously missing indicators, though some technical issues are still being resolved in final testing. The presentation then shifts to demonstrating TradeStation’s two accounts within TradeStation Global, which can operate either through an Interactive Brokers account or TradeStation Securities version 10 and above. Additionally, they introduce a forex program with a funded option available exclusively to their students, starting at funding levels of 5,000, 10,000, or 15,000.

01:04:46

Funded forex program structure and profit sharing

01:04:46

The evaluation account involves money management rules to protect the trader’s capital, with sensible and achievable targets. Traders progress through levels starting from trading 5, 10, and 15 thousand, initially limited to 28 currency pairs. As they advance, indices and gold become available. At the portfolio manager level, capital is multiplied by four, allowing for larger trade amounts up to 2 million. Profit sharing starts at 35% after successful evaluation, increasing to 50% paid monthly at higher levels, and reaching 60% at the top tiers, making earnings highly significant. The comprehensive program includes around 450 lessons and 250 to 300 hours of video content covering everything from forex fundamentals to technical analysis and volume price analysis, providing a deep and thorough education in forex trading.

01:06:14

Trading rooms, market analysis and session wrap-up

01:06:14

The speaker mentions the VPA traders room, where they and Anna are available to answer questions, along with other students. They highlight the website cooling.com as a resource for analysis, mentioning recent analyses on stocks like Hog and Iron Mountain. They inform viewers about upcoming sessions at 2 PM on futures and 3 PM on stocks, encouraging participation or wishing them a good trading day if they cannot attend.

By Anna Coulling – creator of volume price analysis