Learn how to use the Camarilla levels indicator to trade both spot forex and futures

Learn how to use the Camarilla levels indicator to trade both spot forex and futures

Trading is all about levels and flow and the Camarilla levels indicator is one indicator we use to define these levels. Most use 4 levels but we have developed this to add a further two so the indicator gives a range from R6 to S6 with the buffer zone at R1 to S1.

00:00

Introduction to day trading futures and markets

00:00

The webinar begins with a welcome and an introduction to day trading during the U.S. session. The focus will be on futures markets, specifically indices, as well as Forex and some commodities like oil and gold. The speaker mentions that David has the oil chart ready, highlighting the broad range of markets to be covered.

00:34

Volume Price Analysis methodology overview

00:34

The webinar introduces the methodology of volume price analysis, which can be applied to any market and timeframe. The presenter emphasizes the importance of the disclaimer visible on the screen, reminding viewers that trading is risky and advising not to use money they cannot afford to lose.

01:09

Books and worked examples on VPA

01:09

The methodology discussed is detailed in a book available on Amazon, which is the first outlining the approach used by the speaker and her husband for nearly 20 years in trading and investing. Following the initial book, a companion book with over 200 worked examples was released due to popular demand, providing practical applications of the methodology across various markets and timeframes. Additionally, there are specialized books focusing on applying the methodology to forex, binary options, and other areas, all based on the principles of volume analysis.

02:17

Principles of Volume Price Analysis

02:17

This segment explains the concept of volume price analysis (VPA), which involves interpreting price charts by examining price action alongside volume to determine if the volume supports the observed price movements. VPA serves to authenticate chart patterns and incorporates principles from Richard Wyckoff, including his three laws. A fundamental aspect of VPA is the identification and use of support and resistance levels.

02:59

Market conditions end of month and earnings season

02:59

The current trading day is significant as it marks the last day of the month, a time when markets often experience unusual activity due to traders, investors, and fund managers adjusting their positions. This period coincides with earnings season, with major companies like Facebook, Amazon, and Apple reporting their results, making it a critical week for the S&P 500. Additionally, the ongoing pandemic continues to impact the economic landscape, adding further complexity to the market dynamics.

04:46

Economic impact of pandemic and unemployment data

04:46

The speaker discusses the severity of the current economic crisis, comparing it to the Great Depression of 1929. They highlight the alarming unemployment figures in the US, with nearly 4 million new claims, and express uncertainty about the accuracy of these numbers due to potential underreporting. They also mention the upcoming Non-Farm Payroll (NFP) report, emphasizing the dire state of the economy.

05:21

Market volatility and news influence

05:21

The market is showing surprising strength despite high unemployment and negative economic data, appearing to be in an uptrend with volatile intraday movements. This volatility is influenced by rumors and news around the Gilead drug remdesivir, initially reported as ineffective in treating coronavirus but later shown to have more positive trial results. These conflicting reports caused sharp market reactions, demonstrating how medical developments and speculation are driving market behavior.

06:39

Despite ongoing economic challenges, the market’s positive trend continues, driven by earnings reports and developments in the medical situation. The speaker references a rationale from Goldman Sachs regarding the market’s behavior, noting uncertainty about whether this explanation is correct but highlighting it as a factor in the current market optimism.

07:12

Trading perspective amid negative news

07:12

The market tends to look ahead about two years, often pricing in bad news before it fully manifests. Traders focus on profiting from market movements regardless of direction, but intraday trading requires insulating oneself from the surrounding negative economic news and emotions. While investors may be affected differently, this discussion centers on trading strategies and mindset rather than investing.

08:19

Vaccine trial updates and market outlook

08:19

The speaker discusses the volatility in trading caused by fluctuating news about potential COVID-19 vaccines. Various companies like Pfizer and GlaxoSmithKline have different timelines for vaccine availability, ranging from September to mid-next year, while trials such as the Oxford Jenner Institute’s are underway with results expected in June. Amid this uncertainty, the speaker emphasizes using Volume Price Analysis (VPA) to interpret market charts and gain an advantage.

09:34

Importance of support and resistance levels

09:34

The speaker discusses the importance of identifying key price levels in trading, emphasizing how traders focus on whether prices will bounce off or break through these levels. They highlight their current observation of the YM and the Pound/Ozzy chart, noting an unusually strong and consistent trading move throughout the day, starting from the London session, without the typical midday pause or New York session fade.

10:36

Trading the YM chart and key levels

10:36

The speaker discusses analyzing a three-minute chart for the YM (E-mini Dow futures) by marking important levels using various methods such as Fibonacci, moving averages (notably the 200-period), and support/resistance based on price and volume. They mention a specific indicator derived from the Camarillo protocol that applies six key levels to the chart. Particular attention is paid to the fourth level, known as s4 or r4, which often signals a potential breakout when breached. The chart shows the YM at this critical level, and the speaker notes significant selling pressure below a specific candle.

11:50

The price action around the s4 level involved a retest of the open price, with heavy volume observed at the open. Although there was an attempt to push prices higher off the s4 level, the market did not move much beyond the s5 level and instead traded sideways within a narrow range. This challenging trading environment is noted for the YM and is also seen on the NQ and SP futures. The speaker explains that key levels often involve multiple retests and fluctuations before momentum builds, and currently, the market is essentially moving sideways without clear direction.

13:01

Volume Price Analysis signals on charts

13:01

The speaker explains the need for patience in certain market situations and highlights the importance of key levels marked on the chart. Using a volume perspective and volume price analysis (VPA), they describe a pattern with a down candle showing high volume followed by three rising candles with falling volume, indicating weak upward movement. This pattern leads price action to a key level identified on the chart.

13:38

Pound Ozzy forex trade and indicator levels

13:38

The speaker describes maintaining a low camera angle and controlling the volume alongside using candles for ambiance. They then discuss the Pound Ozzy indicator, highlighting its significant growth and development through six levels. This indicator applies to various timeframes up to but not including the hourly chart, providing key levels for market analysis.

14:17

When applied to the hourly chart, the Pound Ozzy indicator shows different values that remain consistent until the week’s end. This allows comparison between daily, intraday, and weekly significant price levels. The speaker illustrates this using the YM chart, noting recent price movements indicating increased market activity.

14:55

Higher timeframe confluence in levels

14:55

The speaker analyzes price action using multiple chart types, including Renko and hourly charts, to identify potential short trade setups. They discuss the significance of resistance and support levels during an uptrend, noting the price attempted to break through the R4 level but failed to reach the RFI reverse. They emphasize the importance of confluence between key levels on different time frames, which creates strong resistance requiring significant volume to break.

16:06

Attention shifts to volume analysis, observing a slight decrease after an initial surge at market open, which is typical. The presenter switches to a three-minute chart to assess resistance levels, noting that R3 is a minor level while R1 represents a more significant resistance point to watch in the price action.

16:41

Buffer zones and consolidation areas

16:41

The speaker explains the concept of a buffer zone between the R1 and S1 levels in trading, noting that this area often consolidates and requires a catalyst to move decisively in one direction. The R3 level on the hourly chart serves as a key indicator where price action tends to pause. The speaker then mentions switching to a three-minute chart and plans to demonstrate their Forex trading approach on the MT5 platform.

17:19

Applying VPA to Forex pairs on MT5

17:19

The speaker mentions switching focus back to Forex pairs and then returning to David to review his chart analysis.

By Anna Coulling – creator of volume price analysis