Learn to trade the currency of first reserve with confidence

Learn to trade the currency of first reserve with confidence

In this vidoe we explain how to trade the currency of first reserve with confidence by using a simple currency majors matrix. This is easy to create and can also be created for other currencies in the same way.

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00:10

Introduction to Majors Matrix and currency pairs

00:10

The presenter welcomes the audience, ensures the screen and microphone are set up correctly, and introduces a workspace called the majors matrix, which organizes six major currency pairs for analysis.

00:45

Dollar selling and 3-minute timeframe overview

00:45

The speaker explains that the current market focus is on the US dollar, which has experienced significant selling overnight. They refer to a three-minute timeframe chart on the CSI, highlighting the dollar’s decline. The speaker also notes an advantage of using the Ninja trading platform over MT4 and MT5 in this context.

01:16

Local time display and London market open effects

01:16

The speaker explains that the local time is displayed in real time, specifically noting that the time shown is 8 o’clock UK time. This helps avoid confusion about timing, especially considering the two-hour difference for other regions. They confirm that the London market has opened, and at 11 minutes past 8, there has been a reversal in the British pound’s value, with the pound rising.

01:47

Volatility triggers and price congestion analysis

01:47

The segment discusses a rapid rise in price accompanied by a significant volatility trigger, suggesting a possible reversal or congestion, especially during the London trading session. Despite the uptrend indicated by the trend monitor, the price is currently in a low volume node area, meaning it requires less effort to push the currency pair through this region. The volume is building steadily, which could facilitate easier price movement higher through these low volume zones.

02:43

Real-time volatility indicator and volume signals

02:43

The volatility trigger indicator activates in real time once price action moves outside the average true range, indicated by purple arrows appearing before the candle closes. This immediate feedback is particularly useful on slower time frames like three, five, or ten minutes, as it provides an early alert to volatility and market maker participation through rising volume, giving traders a valuable heads-up ahead of the candle’s close.

03:40

Tick speedometer for market activity and participation

03:40

The speaker explains the use of a tick speedometer indicator that runs on NinjaTrader, which measures market activity and participation. Green and orange colors indicate high activity and participation, desirable for price movement, while red areas suggest falling volume, narrowing price spreads, and congestion. This indicator helps traders understand market conditions more effectively.

04:40

The tick speedometer also provides precise tick chart settings, eliminating guesswork when trading on tick charts. This tool allows blending time-based charts with tick charts to combine volume price analysis with momentum insights. The speaker uses it on a time-based chart to visualize current market activity, distinguishing bursts of high activity (green), normal activity (orange), and low activity (red). The current market shows an effort to rally with volume supporting a price wick to the upside.

05:36

Trading decisions during volatility and congestion

05:36

The speaker explains that the current strong market movement reflects volatility, indicating either a reversal or congestion ahead. They advise traders who have established positions to consider scaling out profits by closing some or all positions. If holding multiple positions, it’s prudent to take most profits while leaving a few open to benefit if the trend continues. Closing out a single position to secure gains is recommended, as the market may reverse soon, allowing traders to re-enter later if needed.

06:31

Market maker activity and volume point of control

06:31

The speaker explains the current market situation, highlighting that the dollar has been oversold and is experiencing fluctuations around key levels during the London open. Market makers are actively manipulating prices, creating opportunities that many traders are unaware of. Using five-minute charts, the analysis points to significant volume injections, especially in the Aussie dollar, confirming strong price support levels. The volume point of control is emphasized as a critical fulcrum or equilibrium axis in the market, analogous to a seesaw balancing mechanism, indicating where price congestion and support are likely to form or break.

08:23

Volume point of control as market equilibrium

08:23

The volume point of control represents a price level where there is balanced agreement between bullish and bearish market participants, resulting in no directional bias. This creates a significant volume area with the heaviest concentration of trades. When the market breaks away from this point, the volume point of control and the volume histogram are used differently to analyze price movements. For instance, if the market breaks downward, attention is given to potential price levels and thicker volume lines that indicate strong support or resistance zones. These thick lines on the accumulation distribution indicator dynamically adjust in thickness based on how frequently the price level is tested and held, visually highlighting important areas of market activity.

09:20

Support and resistance using volume and price

09:20

The segment explains a straightforward yet powerful visual approach to identifying support and resistance regions based on price and volume. Thicker areas indicate more important support or resistance, while thinner regions are less significant. It highlights how price can break through these levels, with volume playing a crucial role in determining the speed of price movement through low volume zones. The discussion also covers how previous support can turn into resistance after a downside move, emphasizing the combined use of price and volume analysis for more effective trading decisions.

10:55

Trading biases and majors matrix application

10:55

The speaker discusses the advantage of using a majors matrix focused on one currency, particularly the US dollar, which provides insights from both volume and indicator perspectives. They share a personal trading bias towards short positions, explaining that markets typically move faster downward than upward, leading to quicker profits or losses. The importance of knowing one’s trading biases and flaws is emphasized. The speaker explains two approaches when the dollar is being sold: trading long in pairs where the dollar is the counter currency (like pound, aussie, euro) or trading short in pairs where the dollar is the primary currency (like dollar CAD and dollar Swiss). The CSI (Currency Strength Indicator) helps visualize which currency pairs to focus on.

12:59

Momentum in currency pairs and market symmetry

12:59

The discussion explains why certain currency pairs, such as the dollar-Swiss franc, often appear to be in congestion. This happens because both currencies are rising at similar rates, resulting in little differential momentum and minimal movement in the pair. The key to identifying strong trading opportunities is to find pairs where one currency is experiencing strong buying momentum while the other is under strong selling pressure, creating asymmetrical momentum. This principle applies across various currency markets, including currency futures, where all are quoted against the dollar, aligning momentum on the same side.

14:30

A brief pause is indicated before passing the conversation back to Anna.

By Anna Coulling – creator of volume price analysis