Learn how to trade session crossovers using volume price analysis

Learn how to trade session crossovers using volume price analysis

Session crossovers occur each day at the same time in the forex market and provide another perfect opportunity for market makers to play tricks on unsuspecting traders. These are the points at which one major trading centre opens, taking over from another or joining it. In either case, these are times when you may see changes or pauses in the trend, and whilst the forex market trades on a twenty-four-hour basis, the sessions then break down into four-hour cycles. So when a strong trend develops in London, for example, it often weakens or reverses as the US session begins, as was the case here. All confirmed by volume-price analysis.

00:00

Trading disclaimer and risk warning

00:00

The speaker apologizes for a minor delay and introduces the session by emphasizing the importance of the disclaimer. They warn viewers about the risks of trading, especially when using leverage, and strongly advise against risking money one cannot afford to lose. The speaker then prepares to begin the session just before the London market opens.

00:36

Introduction to volume price analysis

00:36

The session welcomes new participants, including quantum and forex program students. The focus will be on analyzing the forex market charts using a methodology called volume price analysis, which examines both price action and trading volume to understand market activity and participation.

01:05

Using volume with price action

01:05

This segment explains how to interpret price action alongside volume to determine the authenticity of market moves. It emphasizes the deceptive nature of the market, designed to mislead independent retail traders and separate them from their money. Understanding the relationship between price action and volume is crucial to avoid being misled.

01:40

Fundamental news and related markets

01:40

The speaker explains that beyond technical analysis, they also consider fundamental news and related capital markets when analyzing the forex market. The forex market is central to the overall financial markets, reflecting broader market sentiment. Currency pairs provide significant insights into events occurring outside the forex domain.

02:12

Development of forex flow indicators

02:12

The speaker explains the development of specific indicators to analyze currency flows and currency pairs in the forex market. These tools, created by the speaker and her husband, help identify market sentiment and the buying and selling dynamics quickly. The methodology, based on Volume Price Analysis (VPA), can be applied across different markets and time frames. The forex market is unique because transactions involve selling one asset against another, which motivated the creation of specialized indicators like the currency strength indicator.

03:10

Currency strength and matrix explained

03:10

The discussion focuses on analyzing currency strength and weakness to identify trading opportunities. The speaker highlights the advantage of breaking down currencies into individual components to instantly see what is being bought or sold. A notable example is trading the British pound, especially relevant to the local time zone of traders. The concept of a currency matrix is introduced, which ranks the strength and weakness of currencies by examining all pairs involving a specific currency, such as the pound or euro. This matrix reveals whether there is a universal sentiment in the market toward a currency, which often leads to strong trends. The values next to currency pairs indicate the strength of these moves, with examples such as a strong pound trend reflected by a high score on the hourly chart. Additionally, a currency array is described as a further refinement that measures the strength of trends, complementing previous indicators and showing clear directional movements in currency pairs.

05:12

Currency heat map and trend analysis

05:12

The speaker explains the use of a currency heat map that tracks the performance of 28 currency pairs across multiple time frames. This tool helps identify market trends by showing rankings not only based on short-term fluctuations but also on longer-term movements like days, weeks, and months. An example with the Aussie Yen illustrates a strong bearish trend on slower time frames, indicating a significant move that would require substantial effort and volume to reverse, although short-term intraday opportunities for quick gains might still exist.

06:39

The discussion shifts to volume price analysis as a foundational step for understanding the forex market. The speaker prepares to focus on analyzing the Euro, indicating an intention to cover specific material related to this currency in the upcoming segment.

07:15

Sentiment data and euro positioning

07:15

The speaker discusses market positioning in the futures market, focusing on extreme euro long positions as indicated by the COT (Commitments of Traders) data. This sentiment data is valuable for identifying when markets are heavily skewed to one side, suggesting potential for dramatic reversals, although not necessarily on an intraday basis. The discussion then shifts to the British pound, highlighting its strong performance the previous day as shown on a dashboard screenshot shared on social media.

08:20

British pound moves and Brexit impact

08:20

The British pound experienced a significant move primarily driven by Brexit developments, with renewed talks and softer EU stances fueling market optimism about a potential deal. This optimism, along with speculation around the reversal of negative interest rates, influenced trader perceptions and reactions. The indicator shows massive buying of the pound, highlighted by a strong rise against the yen and the Canadian dollar, while the euro also rose alongside the pound. The currency strength indicators help identify potential trading opportunities but also signal when simultaneous rises in multiple currencies may reduce trading potential. This analysis reflects market conditions observed the previous day.

10:09

Trading room and student questions

10:09

The speaker introduces the topic of analyzing extreme numbers in trading, mentioning different time frames and trading opportunities highlighted by David. They discuss a question sent by a forex program student related to the trading room, a supportive environment for program participants. The program is designed to be self-directed, providing complete knowledge and proprietary indicators developed by the instructors. The question concerns managing profits during specific trading sessions, particularly the London session, leading to a discussion about session crossovers.

11:56

Managing profits during session crossovers

11:56

The speaker discusses managing profits around the New York trading session, emphasizing that decisions depend on the trader’s timeframe. For intraday traders, holding 50 pips in profit requires awareness of session crossovers, especially from London/Europe to New York, where sentiment can shift dramatically due to fundamental news. Traders should consider multiple timeframes to decide whether to take profits, roll over positions, or anticipate corrections or trend continuations. An example is given of a significant move in the pound/aussie pair, which saw large intraday volatility with reversals between sessions, illustrating the importance of timing and adaptability in trading strategies.

14:14

Volume differences across trading sessions

14:14

The speaker explains how market prices can fluctuate dramatically within a single session, moving sharply higher or reversing quickly, allowing traders to take positions on both the upside and downside. Using the British pound’s 60-minute chart as an example, they highlight the variation in trading volume and participation across different global time zones. The session starts with low activity during the Sunday open, with limited traders in New York and Australia, then increases as Tokyo joins the market, illustrating how volume and activity differ depending on the time of day.

15:20

The discussion continues with the progression through the Europe and London trading sessions, showing a marked increase in market participation and activity. The hourly chart reflects these time zones and their volume differentials, capturing the ebb and flow of trading intensity. However, the speaker notes that viewing price action and volume on faster, intraday charts offers a clearer and more tradable perspective for active traders. They describe a notable surge in volume linked to a large buy by a British bank that affected multiple currency pairs, with the price action shape on the chart providing important clues to market behavior during that period.

16:28

Price action and volume signals

16:28

The speaker explains the timing of the U.S. forex trading session, noting that while the physical market starts at 2:30 p.m. London time, forex traders often begin around 1:00 p.m. They highlight how the London traders’ lunch habits cause a slowdown or pause in trading activity around noon to 1:00 p.m.

17:03

The discussion continues on trading patterns around lunchtime, emphasizing traders’ human habits leading to pauses in market activity. The speaker examines an hourly chart showing a significant price move followed by a shooting star candle, signaling a potential reversal near a volume resistance level. The candle patterns and volume bars suggest a slowdown or possible change in trend.

18:09

Analysis of volume bars reveals that although price moved significantly, the volume did not increase proportionally, even as a volatility indicator was triggered. This suggests a possible pause or reversal. The momentum behind the move is questioned because a large candle typically correlates with high volume, but that was not observed here.

19:07

As the forex session in New York begins around noon, the speaker concludes that the combination of volume, candle patterns, and volatility signals point to notable market activity or a shift. They emphasize the importance of understanding session crossovers and mention using a Renko chart to analyze the price action in more detail.

19:40

Renko chart and trend reversals

19:40

The discussion analyzes price movements on the 60-minute chart, highlighting an initial move lower around the 1960 level coinciding with a shooting star candle pattern. The Renko chart, set to a three-pip scale, captures pullbacks and changes in indicators that could signal scalping trade opportunities. The 16-minute chart confirms this reversal during the US session, emphasizing the development of primary and secondary trends.

20:50

Focus shifts to key support and resistance levels, particularly the R4 level from the Camarilla pivot points, which acted as a significant resistance causing a pullback. Despite this, the overall downward trend resumed and was reaffirmed. The explanation references Wyckoff’s law and trend analysis principles that are covered extensively in the training program.

21:30

Wyckoff method and trading program

21:30

The speaker addresses questions from people who wonder if they can trade effectively using only their books and indicators without enrolling in the program. They explain that while it’s possible, the program offers a deeper level of understanding, particularly on the WYC offside and trend analysis using primary and secondary time frames. The discussion includes an example of using indicators on Renko charts, highlighting trend monitoring and handling noise or pullbacks within specific price areas. The speaker emphasizes that trading decisions depend on one’s timeframe and strategy, such as managing profits or contract sizes during market sessions like New York.

23:05

Current market update and indicators

23:05

The speaker discusses updating the hourly chart for the Pound Aussie and Pound Swiss currency pairs, focusing on the Camarilla indicator. They note the importance of considering the values shown on the 60-minute chart.

23:46

The presenter encounters a limitation with the NinjaTrader platform where the 60-minute chart only displays five days of data, which is insufficient for accurate value calculation. This appears to be a system memory optimization.

24:17

The speaker reloads indicators and historical data, adjusting time frames to analyze price movements. They recall a reversal low that continued lower before a subsequent move higher, highlighting a key price action event.

24:51

Discussion turns to the flexibility needed with support and resistance zones, specifically the outer region of the volume point of control. The speaker plans to elaborate on the significance of the volume point of control indicator and its utility in trading analysis.

25:22

Volume point of control and reversals

25:22

The discussion focuses on price reversals across multiple timeframes, highlighting a strong key level identified by volume around 18:00. The price initially dropped to R1, then attempted to rise but moved sideways, showing an unusual inverted V-shaped pattern rather than a typical V shape. This is supported by congestion periods and rollover behavior at key levels. Additionally, the current market activity on the CSI shows the Swiss currency rising, while the pound remains indecisive, with buyers favoring the yen.

26:30

Market outlook and position management

26:30

The speaker discusses the current market position, suggesting it may not be ideal to maintain an open position at this time due to a potential significant pullback before the primary trend advances. They mention the importance of key levels that need to be surpassed. The segment ends with a handover to David, hinting at something interesting happening on his side.

By Anna Coulling – creator of volume price analysis