Learn how to trade reversals in the forex market using support and resistance

Learn how to trade reversals in the forex market using support and resistance

00:00

Webinar introduction and risk disclaimer

00:00

The webinar begins with a welcome and thanks to attendees for their patience despite a delayed start. The speaker emphasizes appreciation for participants’ time and sets the stage for the forex market discussion. Before diving into trading content, a disclaimer is highlighted about the high risks involved in forex trading, warning not to use money that cannot be lost. The speaker acknowledges that losses are inevitable in trading and stresses the importance of understanding personal risk tolerance. They mention exploring psychological aspects of trading, including assessing personality traits to better prepare for the challenges of the forex market.

01:44

Understanding risk appetite and trading psychology

01:44

The speaker discusses the importance of understanding one’s appetite and tolerance for risk, emphasizing that risk-taking is a natural part of life, such as in relationships, but money often feels different. They highlight that despite technical knowledge and market understanding, the emotional challenge lies in actually making decisions that might cause discomfort or fear of loss.

03:18

The speaker shares a psychological insight about how the brain processes losses and gains, noting that negative experiences stick like velcro while positive ones slide away like Teflon. This tendency makes losses feel more impactful than wins. Being aware of this bias is a crucial first step. The segment ends with an introduction to the day’s focus on the forex market and volume price analysis.

04:18

Forex market overview and volume price analysis basics

04:18

The speaker emphasizes the importance of combining fundamental and related factors with technical analysis to become a complete forex trader. The starting point is always the price chart analyzed through Volume Price Analysis (VPA), which involves volume, price action, and candlestick patterns. Beginners should focus on learning one or two candle patterns initially and gradually expand their knowledge. Support and resistance levels are highlighted as crucial elements for trading decisions, especially when considering counter-trend trades.

05:21

Counter-trend trading involves taking positions opposite to the prevailing trend on a slower timeframe. This method is common since different timeframes can display opposing trends simultaneously. Traders must evaluate if a counter-trend trade is worthwhile, considering factors like spread costs, especially for scalpers who trade quickly for small profits. The decision to trade counter-trend should weigh the potential profitability against transaction costs.

06:21

The speaker suggests moving to a slower timeframe, such as the five-minute chart, to assess counter-trend opportunities more effectively. Support and resistance levels help predict where price movements might pause or reverse. Volume analysis is key to confirming if there is enough strength behind a counter-trend move. Additionally, slower timeframes can indicate important levels where price may hold. Chart setup variations, including the use of proprietary indicators and moving averages, are discussed, stressing the importance of understanding the purpose of each indicator used.

07:26

Currency strength, flow, and counter trend trading

07:26

The speaker introduces specialist indicators developed for the forex market, emphasizing the importance of currency flows and how they affect currency pairs. They explain that the ideal trading pair shows strong inflow in one currency and strong outflow in another, creating a strong divergence. The identification of these flows is done using the currency strength indicator, while the matrix measures trend strength over a longer period. The forex market operates with oscillations and mean reversion, making counter-trend trading a viable strategy.

08:31

The currency heat map is described as a tool that assesses the performance of individual currency pairs across multiple time frames, functioning as a counter-trend indicator. The example given is the pound-aussie pair, which shows strong strength on slower time frames but weaker or opposing signals on faster ones, indicating a potential trade against prevailing sentiment. This highlights the balance between short-term opportunities and longer-term market weight.

09:38

The speaker discusses specific currency pairs like pound-aussie, which has shown an asymmetric move, and plans to analyze euro-cad for support and resistance levels using camarilla pivots, as well as aussie-yen. They invite questions from the audience to be answered during or after the presentation. The speaker also notes adjustments made to their charts, maintaining five time frames on the MT4 platform, and mentions considerations for beginners starting with these settings.

10:44

Chart setup and current market volatility

10:44

The speaker explains the use of Renko charts on the MT4 platform, emphasizing their advantage as non-time-based charts suited to current market conditions. They reference a recent note from Bank of America, describing the current market volatility as ‘weird,’ illustrated by fluctuating Dow movements with big down and up days but overall indecisive activity.

11:50

The market has been erratic due to multiple factors occurring simultaneously. The speaker lists several ongoing issues including the US debt ceiling, upcoming earnings reports, inflation fears, and a severe gas storage crisis, exacerbated by Russia’s control over gas supplies, which has caused significant market uncertainty.

12:58

Recent controversies involving the Federal Reserve are discussed, including resignations of officials Rosengren and Kaplan due to insider trading allegations. The potential investigation of Vice Chairman Clarida and uncertainty about Jay Powell’s reappointment highlight significant instability. These developments could influence the Fed’s policy direction, especially the hawkish stance of the officials who resigned.

14:05

Economic factors and bond market impact

14:05

The discussion begins with the current market sentiment being dovish, meaning low interest rates and more quantitative easing are expected. Important economic events are highlighted for the day, including the ECB minutes release at 12:30 and jobless claims data. Attention is also drawn to the bond market, which is becoming active again with rising yields. The 10-year bond yield is especially significant as it serves as a benchmark and small movements can have large market impacts.

15:13

Focus shifts to key levels in the 10-year bond yield, with 2% considered a critical threshold and 1.55% being the current level under close watch. Market participants react strongly to these levels, often assigning psychological importance to round numbers. The speaker checks investing.com for the latest yield data, noting the market’s sensitivity to these changes. The segment concludes with a brief mention of reviewing dollar charts and technical indicators, signaling a deeper analysis to come.

16:24

Market conditions and dollar index analysis

16:24

The speaker discusses the current market conditions using an indicator called the matrix, which shows very low movement values on the hourly chart. This lack of volatility suggests a quiet market, especially after significant moves the previous day. With the Non-Farm Payroll (NFP) report due tomorrow, the market is in a lull, creating a less encouraging trading environment at the moment.

17:29

Despite the subdued market, there are still aspects to explore and learn from. The speaker explains that typical high market movement values on the indicator are in the triple digits, but current values like 7.58 for the Swiss Yen indicate very low volatility, making it difficult to profit on faster time frames. The discussion includes a system to categorize market activity as low, medium, or average, helping traders understand the market conditions they are entering, likening it to checking the weather before setting sail on a boat.

19:10

Using the dollar index as an example, the speaker highlights the importance of key levels derived from the Camarilla indicator, which act as strong resistance and support points within a range. These levels often serve as targets or reversal points, particularly visible on the Aussie Yen charts. The dollar is generally bullish, influenced by rising bond yields and political factors, notably strengthening under a Democratic administration. This blend of technical and fundamental insights helps frame expectations for the currency’s behavior.

21:01

Support and resistance in forex trading

21:01

The speaker reviews the Aussie Yen currency pair, analyzing support and resistance using multiple chart timeframes including hourly, 30-minute, and 5-minute charts. They explain that the market currently lacks momentum, reflected by wobbly price action and limited movement, making trend and counter-trend trading difficult to interpret. The analysis emphasizes how different timeframes can show contrasting price trends, highlighting the importance of understanding the interplay between slower and faster charts.

22:16

The speaker continues with the Aussie Yen, noting the limited market momentum and how price movement varies across different timeframes. They point out that while the hourly chart may show a strong buy or sell trend, faster charts like the 30-minute and 5-minute can display opposite movements. The discussion underscores that viable trading opportunities depend on where price action sits relative to support and resistance on the faster timeframes, among other factors.

23:58

The focus shifts to the British Pound, which shows more consistent movement across timeframes. Recent volatility is linked to comments from the Bank of England’s chief economist about inflation and rising interest rates. The speaker reflects on historical economic crises from the 1970s, such as the oil crisis and energy shortages, drawing parallels to current challenging economic conditions ahead. They emphasize that navigating the financial landscape in the coming months and years will require careful analysis and expertise, as the situation is expected to be prolonged.

26:07

The speaker analyzes the British Pound’s upward trend across hourly, 30-minute, and 5-minute charts, noting a slight overbought condition in the 5-minute chart that could signal a minor reversal. They discuss how very fast charts might provide early signals, but most traders will need to consider more detailed analysis. The segment concludes with plans to examine the Pound against the Australian Dollar (Pound Aussie) for further insights, focusing on the faster charts to better understand current price dynamics.

27:09

Currency pair flow and market sentiment

27:09

The speaker explains how to use an indicator by filtering out unwanted elements and toggling highlights, focusing specifically on the Japanese yen. A falling yen indicates positive market sentiment, confirmed by consistent movement across multiple timeframes. The discussion then shifts to various market indices, highlighting the Russell index as highly speculative and volatile, often used to gauge investor sentiment in search of the next major tech success.

28:54

Attention moves to the Nasdaq futures, which are showing signs of a positive rebound after a significant drop. The South Korean KOSPI index is introduced as an important, though volatile, benchmark for global economic sentiment. Despite a recent large drop, the KOSPI shows some recovery, emphasizing its role as a sentiment-driven indicator. The speaker notes the importance of recognizing that sentiment in one trading session may not carry over into others, especially before the Wall Street opening.

30:38

The focus returns to forex pairs involving the yen, particularly the Aussie yen, which may be signaling a downward turn or congestion in the market on short timeframes. Movements often start in faster timeframes and then spread through others. A recent crossover on the five-minute chart suggests the Aussie yen might continue to rise, serving as a proxy for risk sentiment. The segment ends with a mention of support and resistance analysis, setting up for a deeper technical discussion.

31:44

Using volume support and resistance with Renko charts

31:44

The speaker analyzes intraday price movements using Renko charts and Camarilla pivot points, noting price action oscillating between support (S3) and resistance (R3) levels. They emphasize the importance of volume and sentiment indicators, explaining that volume point of control acts as a key support/resistance level. Despite choppy price action, a potential upward breakout beyond the R3 level is anticipated if bullish sentiment persists.

33:23

Further discussion focuses on volume-based support and resistance around the R3 level, which has held firmly throughout the week. The hourly chart is described as bullish with evidence of buying pressure, indicated by deep wicks on candles and volume resistance. The potential trade setup targets a move beyond R3 towards R4, identified as the next key resistance level, though this is noted as a counter-trend trade. Daily chart analysis shows attempts to break away from the volume point of control, reinforcing the significance of these levels.

35:09

The speaker highlights asymmetric trades driven by flow into the Australian dollar but tempered by yen weakness. They suggest the Euro-Aussie pair as a stronger trend candidate due to significant moves in the Eurozone. Examination of the Pound-Aussie pair reveals a volatility-driven move higher with a subsequent reversal, primarily influenced by the Pound rather than the Aussie. This exemplifies how asymmetric currency strength can affect trade setups and price action.

37:23

The analysis concludes with a look at the Euro-Canadian pair, which exhibited a modest upward trend between key Camarilla levels (S3 and R3), though it did not reach the R3 resistance. The Renko chart is noted for smoothing out price fluctuations to highlight clearer trend movements, which aids in identifying trend strength and potential reversals within these support and resistance zones.

38:15

Counter trend trades and volume point of control

38:15

The speaker discusses smoothing out price action on a time chart, focusing on a counter trend in a heavily bearish daily chart pair. Despite the overall strong downward trend, they identify a counter trend move originating from the S4 level, noting that this move goes against the broader market trend. The trend monitor reflects this in-and-out movement, highlighting the importance of support levels like S3 for predicting pauses in price action.

39:23

The analysis highlights a significant downward move with seven consecutive heavy down days accompanied by substantial volume. The speaker points out a potential volume support level at the outer edge of the volume point of control, which often acts as a reversal zone. Observations include a bounce off the S4 level and a wick on the candle, suggesting this counter trend move might precede a larger reversal in the pair’s price.

40:33

The pair has moved significantly and reached key levels that suggest a counter trend move against the slower daily timeframe trend. The market typically rises slowly with bursts of momentum but falls faster, which is reflected in the weekly levels. The example demonstrates how counter trend moves can provide useful trading insights. The speaker then shifts focus to the CSI indicator, noting some divergence on the Euro that could signal potential trading points.

41:46

On the shorter timeframes, the CSI shows crosses indicating potential changes in trend direction. The speaker notes a cross and divergence that might signal a continuation of the downward move, with support expected around the S3 level where the price previously bounced. If this volume support does not hold, analysis on slower timeframes reveals the price has broken important levels, warranting checks on weekly and monthly charts for further support.

42:50

The EuroCAD pair is highlighted for its volatility and potential trading opportunities when signals from very slow timeframes are considered. The speaker plans to monitor the support levels over the coming days, using daily and weekly charts. The counter trend move is reinforced by support and resistance levels and the use of faster CSI indicators to understand currency flows. The segment concludes with a handover to a colleague, aiming to clarify the use of these indicators for students and users.

44:08

Trading platforms overview and currency matrix features

44:08

The speaker welcomes the audience and explains that they are running multiple trading platforms including NinjaTrader, TradeStation version 10, and TradingView. They discuss the integration of Interactive Brokers with TradeStation and the transition from version 9.5 to 10. The speaker highlights the unique browser-based nature of TradingView compared to the Windows-based requirements of other platforms.

45:11

The presenter outlines the five trading platforms currently used: MT4/MT5, TradeStation, NinjaTrader, and TradingView. They emphasize that while most platforms require a Windows environment, TradingView operates purely as a browser-based platform, accessible on any device including mobile and iOS. They recommend running Windows on Mac using Parallels for other platforms, but note TradingView’s flexibility as a major advantage.

46:14

The discussion moves to the currency matrix feature on TradingView, highlighting recent enhancements that include metrics showing all-time highs, average highs, average lows, and all-time lows for currency strength. These metrics help users interpret bullish or bearish sentiment by providing a benchmark for what constitutes high, medium, or low values, aiding in understanding overbought or oversold conditions.

47:22

The speaker explains that the numeric values on the currency matrix serve as guidelines rather than fixed thresholds, similar to the 80/20 levels on the currency strength indicator. Regular use of the matrix helps users quickly identify high, medium, and low levels for different timeframes. Currently, this enhanced feature is only available on TradingView but will be added to NinjaTrader in the future.

48:22

The presenter highlights the radar panel recently developed for TradingView, which allows users to track multiple instruments across various markets and timeframes. The panel includes features such as camarilla levels, tick volume, midpoint pricing, trend monitoring, volatility, and pivots. They confirm that similar functionality is being developed for NinjaTrader, specifically within its market analyzer tool.

49:18

Before concluding, the speaker briefly reviews current market conditions for key indices on five-minute charts, specifically mentioning the pound and yen. They note a spike move in the pound and plan to analyze this further using NinjaTrader, while also commenting on the yen’s current lack of strength.

49:44

Currency indices and recent market moves

49:44

The speaker discusses the currency indices, noting that the dollar is experiencing a downward signal while the euro is moving sideways on a five-minute chart. They then transition to using the NinjaTrader platform to analyze a strong move in the dollar-yen pair, highlighting examples of volume price analysis (VPA) trading and other techniques.

50:13

Pound yen volatility and market maker traps

50:13

The speaker discusses the Pound/Yen move triggered by news, advising traders who entered early and are bullish to close most positions when a volatility trigger occurs and the move favors them. They warn against staying in congested sideways or reversal moves, emphasizing that volatility accompanied by high volume indicates market maker participation, whereas low volume volatility suggests superficial price action.

51:15

Volatility is explained as a compression of time where price moves rapidly beyond its usual range, often driven by market makers reacting to news. The volatility trigger indicator, which measures price action outside the average true range, helps identify these moves. Market makers use such rapid moves to trap traders motivated by fear of missing out, leading them into weak positions.

53:15

The market is controlled by market makers who can manipulate prices much like a store owner sets prices. These moves often happen at session openings and key times like the London open, US open, and rollover periods. Ninjatrader’s local time display helps track these events accurately. Recent volatility in Pound/Yen was triggered by Bank of England inflation comments, with the speaker expressing concerns about looming stagflation affecting currency moves.

55:21

The speaker elaborates on stagflation—rising inflation with a stagnant economy—and its implications for interest rates and currency strength, suggesting limited long-term rate rises. The Pound/Yen has been trading in a narrow range reflecting broader index movements, showing structural weakness. Despite occasional recoveries, these are short-lived and volume patterns indicate limited upward momentum.

56:19

Using daily and five-minute charts of major indices, the speaker highlights fragile market conditions with resistance levels and volume points of control acting as barriers. They note the presence of significant geopolitical and financial factors contributing to market weakness. While not predicting a major short-term downturn, they anticipate a potential significant shift in sentiment toward bearishness in the near future.

57:48

Recent buying activity is noted on the charts, but price is still expected to revert to key volume levels with resistance overhead. Similar patterns are observed across different indices. The speaker then transitions to demonstrate tools available in Ninjatrader for monitoring currency pairs and market conditions, showing how multiple charts and workspaces can be managed efficiently.

58:43

The speaker reviews the Pound/Yen and Yen movements on Ninjatrader, noting some messy price action but strong buying in the Swiss Franc, a risk currency. They introduce TradeStation and its radar screen feature, a powerful tool displaying multiple currency pairs on five-minute charts. This setup allows traders to monitor numerous markets simultaneously and filter based on different criteria, enhancing trading efficiency.

59:46

The speaker explains the flexibility of TradeStation’s radar screen, including symbol and interval linking across multiple charts. This allows quick switching between pairs and timeframes, such as the Dollar/Yen on the 10-minute chart. The demonstration highlights the platform’s ability to handle complex trading setups and streamline market analysis.

01:01:11

Volume price analysis and benchmarking effort vs result

01:01:11

The segment explains how to analyse volatility and volume in price action using candlestick patterns. It highlights that despite strong volume and multiple attempts to rally, the market shows weakness rather than strength, as seen in the formation of long-legged doji candles and repeated failures to sustain upward movement. The discussion emphasises that volume price analysis (VPA) focuses on anomalies and benchmarking volume relative to previous activity to gauge market effort and likely outcomes.

01:02:18

This part covers the importance of comparing current volume to past volumes to interpret market effort and results. A hammer candle with significant volume suggests substantial buying pressure, indicating a potential reversal opportunity. However, subsequent candles with high volume but weak price action warrant caution. The segment stresses continuous benchmarking of volume against previous candles to assess the strength or weakness of moves.

01:03:16

The speaker discusses the role of rising volume in confirming upward moves and mentions that indicators like the dollar index can support volume-based analysis. They demonstrate how to compare the volume of a current widespread candle with similar past candles on the chart to assess whether the volume is consistent with the price action. This comparative approach helps traders decide if the trend is sustainable or losing momentum.

01:04:13

This segment focuses on interpreting volume relative to price moves to determine if a trend has strength or is losing steam. If volume is too high or out of balance, it may signal that the move won’t continue far. At the top of a move, identical volume bars delivering different price results suggest potential congestion or sideways movement rather than a reversal. The concept of effort versus result is reinforced as a key principle in volume price analysis.

01:05:17

The analogy of driving a car up an icy mountain road is used to illustrate the concept of increasing effort without progress. High volume with little price movement means sellers are overwhelming buyers, leading to a market that is stalled or likely to reverse. This example shows heavy selling pressure despite attempts to rally, emphasizing how volume and price action together reveal underlying market dynamics.

01:06:16

This section highlights a pivot high and a subsequent bearish candle as a classical example of interpreting volume and price through benchmarking and anomaly detection. The speaker summarizes how these tools help traders understand market behavior, reinforcing the importance of comparing volume and price patterns across the chart to make informed decisions.

01:06:53

The final segment briefly reviews the Pound Yen chart, noting that the price has returned to a previous volume price area (VPA). It warns traders about the risks of fear of missing out (FOMO) and advises closing profitable positions when volume price signals work in their favor, as the speaker personally does most of the time.

01:07:28

Risk management and trading psychology advice

01:07:28

The speaker discusses decision-making when facing a losing position in trading, emphasizing the challenge of choosing whether to hold on and risk deeper losses or to close out and move on. They acknowledge the difficulty of this choice, especially when losses accumulate and the possibility of being stopped out arises. The segment concludes with information about quantumtrading.com, highlighting that all indicators are available there and noting the company’s policy of free platform transitions for customers, contrasting this with competitors who charge fees for such services.

01:08:26

Quantum Trading education and funded trader program

01:08:26

The speaker explains that customers can start trading on platforms like MT4 or TradingView and later migrate seamlessly to others such as NinjaTrader or TradeStation without extra cost. This flexibility accommodates changing trading needs, as different platforms offer unique features like TradeStation’s RadarScreen or NinjaTrader’s Market Analyzer. The company is actively developing equivalent indicators across platforms to ensure users get consistent tools regardless of the platform they choose.

01:09:55

Additional features such as the Currency Matrix from TradingView are being integrated into other platforms like NinjaTrader and TradeStation. While transferring platforms is generally free, users may pay extra if new indicators not present on the original platform are added, such as tick charts exclusive to NinjaTrader. The service includes 24/7 global customer support available every day of the year.

01:10:54

The Quantum Trading Education program offers a comprehensive learning experience with around 450 lessons and 250-300 hours of video covering topics like Volume Price Analysis (VPA), relational and fundamental analysis, trading psychology, and mechanics. The program includes 13 PDF downloads and a traders’ chat room hosted by the speaker, providing a supportive community and platform-specific guidance.

01:11:55

A funded forex program allows students to trade with large accounts provided by the company, requiring only an entry fee to access evaluation accounts of $5,000, $10,000, or $15,000. This program tests trading skills and consistency, with no risk beyond the initial fee. After meeting profit targets at the evaluation level, traders progress to larger funded accounts, with the potential for significant account growth and profit sharing.

01:13:01

Upon passing the evaluation level, account sizes increase fourfold and can scale up to $2 million, with profit paybacks increasing from 35% at evaluation to 50% at portfolio management and up to 60% for the highest levels. Evaluation level trading is limited to 28 currency pairs, while portfolio managers can trade additional assets like indices and gold. The evaluation must be completed within 12 months, with no time limits on higher levels, and includes strict risk and money management rules.

01:14:09

Access to the funded forex program is exclusive to enrolled students and cannot be purchased separately. The speaker mentions an upcoming forex-specific website distinct from the existing stocks, commodities, and indices site. Additionally, various educational books are available on Amazon, supporting the learning resources provided by the program.

01:15:19

Books, resources, and webinar closing remarks

01:15:19

The speaker highlights the VPA book, which ranks highly in investment analysis, strategy, and the forex world, noting its popularity and numerous positive reviews on Amazon. They express gratitude for the support from traders worldwide, mentioning that the feedback has been very humbling. The session concludes with thanks to the audience, a safe and successful trading day, and an announcement of a return later in the afternoon.

By Anna Coulling – creator of volume price analysis