If you want to succeed as a forex trader, learn to read related markets

If you want to succeed as a forex trader, learn to read related markets

If you want to succeed as a forex trader, learn to read related markets and what they reveal in terms of sentiment. the forex markets are the gateway of sentiment with consequent flows as money is rotated from risk on to risk off and back again.

00:11

Introduction to market sentiment and trading view

00:11

The speaker apologizes for technical issues and confirms their microphone is on. They introduce the topic of sentiment analysis, emphasizing its importance and their intention to review it using TradingView to simplify market understanding.

00:49

Risk on vs risk off market principles

00:49

The segment explains the fundamental principle of market behavior as a balance between ‘risk on’ and ‘risk off’ sentiments, where participants either seek higher risk for greater rewards or prefer safer, low-risk investments. This dynamic operates like a seesaw, influencing all markets including forex, equities, commodities, and bonds. Understanding this flow and relational analysis is crucial for interpreting market movements, which is why it is emphasized in the forex program. The segment also introduces an example from TradingView to illustrate these concepts.

01:53

UK 100 and volatility index analysis

01:53

The speaker discusses the UK 100, also known as the Footsie 100 index, displayed in the bottom right of the screen. Above it, various volatility indexes are shown for different time frames—1, 3, 5, and 15 minutes. The focus is on the 3-minute chart, highlighting the UK market opening at 8 o’clock.

02:29

Sentiment reversal impact on Pound Yen

02:29

The reversal observed in the Pound Yen was driven by a shift in market sentiment, which was also reflected in the UK 100 index at market open. A volatility trigger caused a spike and subsequent congestion within the spread of the candle, indicating either a buildup of congestion or a reversal in the market. This explains why the Pound Yen did not continue further and instead reversed. Overall sentiment is currently weak on faster timeframes, although the daily outlook remains bullish, raising questions about the duration of this bullish trend.

03:32

US markets and volatility triggers

03:32

The segment discusses a fast scalping strategy using the volatility index, highlighting its movement with open gaps and slight fluctuations. It explains how the trend monitor and volatility triggers work together to analyze related markets. The focus then shifts to US markets on the Globex electronic contracts, covering the three major indices: Dow (YM), Nasdaq 100 (NQ), and S&P 500. The current market condition is described as trading in congestion, with volatility and volume point of control indicating the price is oscillating within a defined range.

04:27

Market headlines and volatility effects

04:27

The speaker discusses the common use of shorthand phrases in media headlines, explaining that headlines often lack detailed analysis and are designed for quick consumption. They note that headlines typically highlight market reactions to events like trade tensions or health crises, but these reactions are often temporary and can reverse shortly after. This highlights the limited usefulness of headlines for understanding the true market dynamics.

05:26

Volume point of control and congestion

05:26

The speaker analyzes the Aussie Yen chart around the London open, noting price action features such as wicks and congestion phases. They discuss the importance of the volume point of control (VPOC) as a market fulcrum, highlighting how price tends to move quickly through low volume areas and how the VPOC can indicate potential support or resistance levels. The trend monitor remains bullish, with the VIX dropping and UK 100 sentiment improving, suggesting a possible long trading opportunity based on volume and market structure.

07:01

Trading congestion and pivot analysis

07:01

The speaker analyzes the volume histogram, noting a decline in volume around the 10-minute mark which suggests that if the market breaks above previous tops at levels 34, 35, and 36, it could move quickly. A mini double top and congestion phase are forming, indicated by pivot points (highs and lows) that help define the market’s current status beyond simple trend lines or support and resistance levels. This congestion is identified by pivots occurring at nearly the same price level, signaling a buildup before a potential breakout.

08:22

The market is expected to break out quickly once volume falls away further, continuing the current bullish trend. The VIX is dropping to 28.3, supporting the positive trend monitor. Volume comparisons are made between Asian and European trading sessions, highlighting a buying reversal during the European session and a potential continuation of the upward movement. The speaker also mentions using faster timeframes, like 15-second charts, for detailed analysis, though they acknowledge this may not be suitable for all traders.

09:18

Multiple timeframes and volume insights

09:18

The speaker discusses the significance of volume in price action, noting that a strong level with high buying volume supports a potential breakout. When price returns to a high-volume area but volume is lower than before, it indicates that selling pressure has diminished, suggesting that the market is likely to rally from that level. This subtle observation highlights the importance of analyzing volume changes to understand market sentiment.

10:18

The importance of using multiple timeframes in trading is emphasized, with a 15-second chart showing a volatility candle that signals an expected reversal. This example illustrates how multiple timeframes provide detailed insights, akin to pieces of a puzzle, enabling better trading decisions. The speaker acknowledges the need for multiple monitors and workspaces to manage this information effectively, reflecting on their early experiences with large setups to handle complex data.

11:16

Holding positions and scaling strategies

11:16

The speaker discusses analyzing multiple price monitors and volatility indicators like the VIX to understand market movements. They highlight how the UK 100 index is attempting to break free from early volatility, while the Aussie dollar is pushing higher. Emphasis is placed on using multiple timeframes and volume to reveal underlying buying strength, aiding in more informed trading decisions.

12:16

The importance of holding profitable positions to maximize gains is explained, warning against closing out too early due to nervousness during consolidation phases. The speaker introduces the concept of scaling out by gradually reducing multiple contracts to lock in profits while allowing some positions to run. They also mention scaling in as an alternative strategy, where positions are built incrementally. Both methods have pros and cons and are covered in detail in their program.

14:12

Sentiment window and market trends

14:12

The discussion focuses on market sentiment as indicated by the VIX and major indices. The VIX is falling, signaling reduced volatility, while the FTSE 100 remains stagnant and somewhat weak. US markets show signs of potential upward movement with increased trading volume, particularly in the Nasdaq and ES futures, although the ES lacks a volatility trigger. The trend monitor is fluctuating but beginning to indicate a bullish transition, with caution advised due to some weak price action. The speaker also mentions switching focus to currency indices and plans to address a question about the trend monitor’s sensitivity.

15:53

Trend monitor sensitivity adjustment

15:53

The speaker explains that on the trend monitor you can adjust the sensitivity to either increase or reduce how quickly changes are detected. This smoothing feature helps manage periods of congestion so trends don’t flicker too rapidly. It is suggested to use the default sensitivity initially and then tweak it gradually based on personal preference. This adjustment can be applied across various indicators and platforms like MT4/5, NinjaTrader, and TradeStation.

16:57

The current market shows a small rally in the Australian dollar, indicated by the upward movement of the blue line across different timeframes from 3 to 15 minutes. Meanwhile, the Japanese yen is selling off, moving lower but without strong momentum.

17:28

Currency strength and trend identification

17:28

The speaker explains how to use the CSI indicator to identify trends in currency pairs by observing the steepness of lines, exemplified with the British pound showing strong early buying followed by selling. The Euro is highlighted as rising against the pound, indicating a developing trend on slower timeframes. Pairs like Pound-CAD and Dollar-Swiss are examined, showing both currencies moving in the same direction, which indicates no strong trend or differentiation. However, a slight divergence is noted where the dollar is starting to fall and the Swiss franc is rising, suggesting the beginning of a potential trend separation.

19:15

Dollar and Swiss franc divergence

19:15

The speaker discusses the current price-based chart showing market congestion followed by a potential move as buying of the Swiss franc increases and the US dollar weakens. They emphasize monitoring developments on the currency charts, particularly on daily and weekly timeframes, to better understand the emerging trend.

By Anna Coulling – creator of volume price analysis