If you’re struggling to understand the different types of trends, then struggle no more – all explained here

If you’re struggling to understand the different types of trends, then struggle no more – all explained here

Forex traders, and indeed traders in general, talk about trends and group a price move as higher or lower. But in fact, as with all price action, trends move in very different ways and it pays to understand what type of trend you are considering joining. In this video from the forex webclass, we explain all you need to know, which will help you in your forex trading.

00:00

Webinar introduction and trading disclaimer

00:00

The webinar begins with a warm welcome from Anna Cooling and her husband David. Anna expresses her excitement about starting the session and reminds viewers of the important disclaimer regarding the risks involved in trading, advising not to use money that one cannot afford to lose.

00:31

Overview of volume price analysis in forex

00:31

The segment introduces the focus on the forex market and chart analysis using volume price analysis, a methodology explained in books available on Amazon. This approach combines price action and volume data to verify the authenticity of market moves. Additionally, the analysis considers fundamental news releases and related markets, highlighting aspects often overlooked by many traders until recently.

01:38

Related markets and risk sentiment proxy

01:38

The discussion focuses on how certain websites analyze related markets by interpreting sentiment and linking it to movements in currencies and currency pairs, with the Aussie Yen often serving as a proxy for risk sentiment. Despite the ongoing pandemic and its severe economic impacts, including high unemployment and struggling industries, market sentiment remains very positive. US stock indices and futures continue to rise, reflecting an optimistic market outlook contrary to the broader economic challenges.

02:44

Using quantum trading indicators

02:44

The session focuses on identifying trading opportunities using proprietary quantum trading indicators. These forex-specific tools provide a clear visual of currency movements through the currency strength indicator, which shows whether currencies are being bought, sold, or moving sideways. The indicators also reveal market sentiment by tracking the flow of buying and selling across currencies in various time frames. Additional tools include the matrix, which ranks currency pairs from strongest to weakest, and the array, which measures trend strength in individual pairs, emphasizing the importance of trend analysis in trading.

04:22

Currency strength and trend analysis tools

04:22

The session begins with an overview of the currency heat map tool, which analyzes the performance of 28 currency pairs across multiple time frames, effectively summarizing data from nearly 300 individual charts. The presenter emphasizes the efficiency this tool provides in monitoring market trends. The focus then shifts to examining trend structures, highlighting the importance of recognizing how market moves can vary significantly across different trading sessions. Special attention is given to the Canadian dollar, with references to additional visual materials and write-ups available on the presenter’s Facebook page.

05:31

Canadian dollar sell-off and chart analysis

05:31

The speaker discusses a forex trading page followed by around 35,000 traders where they share analysis and screenshots. They focus on the Canadian dollar’s significant decline observed in the hourly chart from the previous day, highlighting the importance of the steepness of the line as an indicator of momentum, showing strong selling activity compared to other currencies.

06:39

The analysis compares the Canadian dollar’s sharp decline to other currencies, noting fluctuating movements in the pound and modest recovery in the US dollar. While the Canadian dollar’s drop seemed like a clear trading opportunity, a closer look reveals inconsistent selling across pairs. The Canadian dollar fell strongly against the euro in the morning, but this selling paused at key support and resistance levels during the US session, then continued against the US dollar.

07:49

Trend types and session impacts

07:49

The speaker discusses different types of trends in forex trading, emphasizing that not all trends are equal. Some trends are smooth with clear higher highs and lows, while others are choppy or volatile. Recognizing the type of trend is crucial rather than blindly following it. The concept of primary and secondary trends is introduced, and the importance of analyzing volume to distinguish between pullbacks and reversals is highlighted.

09:20

Using the London session as an example, the speaker shows how volatility triggers and volume analysis help identify genuine price movements. Despite initial sideways congestion, increased volume and volatility indicators signal the start of a strong upward trend. The trend progresses through several support and resistance levels, measured by a specialized camarilla indicator, demonstrating how to track trend strength and direction.

10:25

The importance of marking support and resistance levels using price and volume is explained, with the camarilla indicator providing a hierarchy of these levels. The trend moves through resistance points with some congestion and pullbacks but continues upward. The speaker notes the timing and volume patterns during the morning session, emphasizing that the trend appears stable and encouraging confidence in the move.

11:31

At the start of the US session, despite high volume, the price movement stalls due to hitting a critical resistance level (R4 on the camarilla). This results in sideways price action, illustrating how volume price analysis (VPA) can detect anomalies where volume does not lead to expected price changes. A comparison is then made to the dollar Canadian pair, showing different behavior despite similar timing.

12:38

Examining the dollar Canadian pair during the London session reveals trading around the volume point of control (VPOC), considered fair value with no clear directional bias. The pair initially moves sideways between strong support and resistance levels. Around midday, a hammer candle with high volume signals buying pressure and price support, indicating a potential beginning of an upward trend.

13:50

As the dollar Canadian trend develops, it faces resistance at key support and resistance zones, requiring momentum to break through. Narrow-range candles with decent volume indicate price support during sideways movement. The start of the US session brings increased volume, particularly from local Canadian traders, contributing to rising prices and establishing a trend with some pullbacks and consolidation periods.

14:52

The speaker summarizes factors affecting trends such as smoothness and consistency, price and volume support/resistance levels, and session timing. Comparing the dollar Canadian trend to the Aussie Yen demonstrates how different currency pairs exhibit varying trend behaviors. The Aussie Yen is introduced as a proxy pair, often used for confirmation in trading strategies, highlighting the need to understand each trend’s unique characteristics.

16:07

Aussie Yen trend and risk sentiment

16:07

The speaker discusses market risk appetite, noting that rising Aussie Yen indicates positive market sentiment with indices moving higher. Despite the trend showing low volatility, the market is choppy. They introduce support and resistance indicators developed in Quantum, including the accumulation distribution indicator on Ninja Trader, which highlights strong support and resistance levels by the thickness of lines and the number of times these levels have been tested. These indicators help in setting stop losses and price targets.

17:16

The discussion continues on trend indicators specifically developed to identify trends, namely the ‘trend dot’ and ‘trend monitor.’ The trend dot changes color to signal potential pullbacks or reversals, while the trend monitor indicates trend strength through color intensity. The speaker explains how these indicators suggested the Aussie Yen trend might reverse but it ultimately stayed strong. They emphasize the difficulty of holding positions during pullbacks without understanding trend behavior.

18:56

The speaker contrasts the choppiness of the Aussie Yen with another currency pair, the Euro Canadian, during the same timeframe. They note that although there were pullbacks, buying support was evident through candle wicks and volume, allowing the trend to continue upward. Support and resistance lines based on volume profile (VP) helped identify breakout points. The Euro Canadian trend was easier to follow and more consistent compared to the Aussie Yen.

19:56

The speaker recommends intraday traders to seek consistency and easier-to-read trends, such as that seen with the Euro Canadian pair, possibly using Renko charts to smooth price action. Renko charts, combined with the trend dot and trend monitor indicators, help identify entry and exit points by signaling trend changes. They note that while the Renko helped somewhat with the choppy Aussie Yen trend, the overall trend was still difficult to trade.

21:06

The speaker concludes by emphasizing the importance of understanding trends, trading sessions, and support/resistance levels based on both volume and price to improve trade entries. They transition to mention a specific currency pair, the Canadian Dollar Yen, and hint at shifting focus to another pair, the Pound Canadian Dollar.

21:36

Pound CAD and Dollar CAD market moves

21:36

The speaker discusses monitoring the pound using Ninja Trader on short timeframes, noting unusual activity and a significant move lower starting around seven o’clock. Despite congestion, there was a clear reversal in the pound’s movement. The speaker defers detailed analysis to David.

22:08

The speaker mentions the dollar Canadian pair, indicating that David is more closely monitoring it. They reference using hourly and ten-minute charts to track currency pairs and note picking up signals based on the CSI indicator from earlier in the morning.

22:45

The discussion continues on the Canadian dollar and the pound, highlighting a recent reversal seen in the pound and currency movements from the previous day. The speaker points out how the euro was rising while the Canadian dollar was falling, emphasizing a shift in trends and deferring further details to David.

23:15

The speaker analyzes the dollar Canadian pair’s behavior, noting that initially the dollar and Canadian dollar moved together without a strong trend, but subsequently diverged with the dollar rising and the Canadian dollar falling. This movement was identified in recent market signals, and the speaker briefly comments on unusual market activity from the previous day.

23:48

Upcoming Jackson Hole summit and inflation talk

23:48

The speaker discusses the anticipation surrounding the upcoming virtual Jackson Hole summit, a key annual event where central banks gather. There is speculation that a Federal Reserve official will make significant comments about inflation, which will be closely watched by gold traders and market participants. Although no major news has occurred recently, some fundamental releases could still influence currency markets. The focus remains on the inflation outlook from the Fed. The speaker then transitions to live market updates and invites viewers to ask questions during the session.

By Anna Coulling – creator of volume price analysis