Lessons in volume price analysis for all forex traders

Lessons in volume price analysis for all forex traders

Whether you trade currency futures or spot currencies, the volume price analysis methodology can be applied to both since all that’s required is a chart with volume and price. So whether it’s futures volume or tick volume, you can apply VPA to all your forex trading.

00:17

Intro and chart setup issues

00:17

The speaker apologizes for any frustrations caused by charts disappearing due to different screen resolutions. They explain the technical issue and proceed to adjust the chat box and prepare the next screen to continue the presentation.

00:49

Currency futures overview

00:49

The speaker begins by discussing the Australian dollar and shifts focus to currency futures, highlighting significant dollar buying activity in the morning. They mention four key currency futures: the Australian dollar (6A), the British pound (6B), and the Canadian dollar (CAD), noting that the CAD futures represent the inverse of the US dollar.

01:23

Volume and congestion trading

01:23

The speaker discusses trading strategies using currency pairs such as the CAD dollar and the Euro dollar, focusing on the importance of volume and key levels. They highlight the concept of congestion phases in price channels, explaining that traders need patience during these periods. The crucial point is to wait for a breakout confirmed by volume, which then provides clear guidance on where to place stop-loss orders. Support and resistance levels play a vital role in determining the breakout direction and trading decisions.

02:42

Accumulation distribution indicator explained

02:42

The speaker explains the cluster or accumulation distribution indicator on NinjaTrader, which visually represents support and resistance levels by the thickness of lines. Thicker lines indicate stronger levels. Numerical values show how many times each level has been tested or retested, enhancing the understanding of their strength. When levels combine into a cluster, it signals a strong support or resistance area.

03:44

The chart shows a support platform where price was held up, then broke through and retested multiple times. The focus is on observing a breakaway and confirmation with volume, which occurs around early morning hours before the European trading session begins.

04:15

Breakaway and volume confirmation signals

04:15

The segment discusses analyzing futures volume and price action in a downtrend. It highlights the importance of volume spikes during attempts to rally, which often indicate weakness and a likely continuation of the downward trend. Specific candle patterns, such as bearish engulfing candles with significant volume, are noted as key signals for entry or re-entry points on shorter time frames like five and ten-minute charts. Overall, the focus is on identifying congestion phases and volume-driven signals that confirm ongoing market weakness.

06:04

Volume clusters and resistance levels

06:04

The speaker discusses congestion building at the volume point of control with resistance levels forming a cluster overhead, capping price action. The trend monitor, previously red, is shifting into a deeper red phase, indicating a pause in the trend. A candle with a lower wick and significant volume suggests buying pressure, preventing the price from dropping further despite selling activity.

07:02

Further analysis highlights potential for minor rallies amid congestion, emphasizing the importance of multiple time frame analysis. The example focuses on the CAD dollar futures market, illustrating breakaway trading with strong levels and volume point of control. Despite some selling pressure and wicks indicating indecision, the overall pattern does not support a bullish reversal at this stage.

07:59

The trend monitor confirms a period of indecision followed by continuation of the bearish trend. Attention shifts to the spot market, specifically the Aussie dollar, where a pause point is observed after a strong rally lower. Potential reversals are emerging, which is common following sustained moves, indicating a possible shift in momentum.

08:35

Currency indices and market sentiment

08:35

The speaker reviews currency indices on a chart, highlighting the yen, dollar, euro, and British pound indices. They note a strong move in the majors driven by dollar buying, which appears to still have upside momentum despite a congestion phase. The yen had a strong rally alongside the dollar but is now starting to flatten.

09:30

The discussion shifts to market sentiment using the VIX volatility index, which has opened slightly higher but shows no strong directional bias. Various timeframes from one minute to daily are reviewed, showing a recent big rally and VIX spike followed by a congestion phase. Intraday volatility is contained within an expected volatility candle, indicating no strong market momentum either way.

10:32

The speaker examines intraday charts of major indices including the YM, NQ, and ES on both 5-minute and daily timeframes. They note that recent Chinese economic data has caused a muted market reaction, leaning slightly bearish overall. The speaker points out that forex traders often overlook the relationship between US equity markets and forex, despite clear sentiment correlations observable in electronic futures trading.

11:45

The focus is on US electronic futures contracts, which trade nearly 24/7 and provide real-time sentiment ahead of cash market openings. The speaker emphasizes their value for early UK traders to gauge US market perceptions and sentiment, suggesting that platforms like NinjaTrader are useful for monitoring these markets before domestic opens.

12:14

Risk on/off and forex market flow

12:14

The speaker explains that many trading platforms, such as MT5 and NT4, provide views on market sentiment across various asset classes. Trading is fundamentally about the flow of sentiment between risk-on and risk-off states, primarily reflected through the forex market, which acts as a central gateway for cash. This sentiment flow is continuously visible in risk-related currencies like the Swiss franc, yen, dollar, and commodity currencies. The volume point of control (VPOC) is a key indicator seen on almost every chart, demonstrating where the most trading volume occurs.

13:24

Using a one-minute chart example, the speaker illustrates volume price analysis (VPA) within a tight 15-pip range. A candle with a deep lower body and high volume suggests buying activity, as the close is higher than the open, indicating demand. Subsequent candles, including hammers, confirm additional buying pressure, supported by volume injections that lead to price moving higher. The trading activity revolves around the volume point of control with resistance overhead. Volume analysis is approached both on an individual candle basis and by examining groups of candles to understand broader market behavior.

14:18

Volume point of control analysis

14:18

The discussion focuses on analyzing trends by observing volume behavior across different time frames. Key points include identifying whether a trend is rising on increasing or decreasing volume, examining volume anomalies, and using the volume point of control with support and resistance levels. When price action breaks through resistance, volume patterns are crucial to assess if the move will be sustained, as lower volume in certain areas means less resistance and potentially faster price movement.

15:14

The speaker explains that markets typically move quickly through low volume areas, emphasizing the importance of anticipating market moves based on volume relationships. Real-time volume data is used to confirm market strength or weakness, with price and volume alignment indicating bullish conditions. Specific price levels are noted as highly precise, acting as strong support or resistance points, with subtle price action details like candle wicks signaling selling pressure.

16:06

Further elaboration is given on how volume influences price acceleration through resistance levels. If volume does not resist a move, price is expected to advance more easily and quickly. The principles of volume-based resistance mirror those of price-based resistance, highlighting volume as a key factor in market movement. The speaker notes the evolving nature of volume patterns over time and the importance of patience when observing these developments.

16:37

Attention shifts to analyzing slower time frames, where additional signals help confirm trading decisions. The speaker highlights the importance of integrating insights from multiple time frames—such as from one minute to five minutes or from half hour to hourly charts—to validate market trends and improve the reliability of trading strategies.

17:10

Multi-timeframe volume significance

17:10

The speaker explains that price levels on higher time frames, such as five minutes, carry more significance than those on one-minute charts due to the longer time period involved in their formation. These levels are important when considering potential trade entries, especially for reversals off congestion phases. The discussion emphasizes evaluating the market based on actual chart information rather than fixed risk-to-reward ratios, noting that volume is falling off and resistance levels above could limit the upside potential of a trade.

19:06

The market faces several resistance clusters and congestion zones that will likely cause pauses or reversals, limiting the potential headroom for long trades. On the ten-minute chart, there is a strong resistance area tested multiple times and a large wedge of volume acting as further resistance. The analysis highlights the importance of examining multiple time frames—five and ten minutes—to understand the effort required for price to break through these zones. The speaker advises adapting trading tactics to the market context, whether trading reversals, trends, or breakouts, and selecting trades based on chart structure and volume profiles.

20:25

Trading tactics and psychology importance

20:25

The speaker discusses different approaches to trading, highlighting that some traders focus on applying a single tactic across all markets or specific currency pairs, while others use multiple tactics across various markets. They emphasize the importance of discovering a trading style that suits the individual, starting with the psychology of trading. The segment concludes with a brief mention of analyzing the cable market and noting a significant reversal.

21:47

Cable reversal and Brexit impact

21:47

The market is showing strong activity on the five- and ten-minute charts, with a reversal occurring on the fifteen-minute chart. This movement is reflected in the dollar’s strong sell-off, which is also mirrored by the yen. This selling pressure is influencing the current behavior of the cable (GBP/USD) currency pair.

22:14

A rapid reversal trade is underway, coinciding with the London market open. Volume analysis starting from 8:00 AM London time shows significant buying activity during the European session, indicating strong market interest and momentum building in the currency markets.

22:44

Volume comparisons across sessions reveal increased buying starting at 8:00 AM, with a large candle and high volume confirming bullish momentum. Further sustained buying occurs around 8:15 AM, supporting the upward price movement on shorter time frames.

23:11

The price is advancing toward a low volume node, which should allow smoother movement through this area with less resistance. Breaking away from the volume point of control, the price is expected to move quickly up to the next significant volume level near 1.23, where progress may slow due to increased volume concentration.

23:35

Brexit has returned as a key factor influencing market volatility, with the potential for sudden and unexpected moves caused by political developments. Traders should remain cautious as rapid changes can occur instantly based on new statements, reflecting a return to the uncertain trading environment experienced in recent years.

24:08

Complete forex trading program overview

24:08

The speaker introduces a comprehensive forex trading program that covers technical, fundamental, and relational aspects of trading. The program includes core modules on trading mechanics and psychology, helping traders understand themselves through self-assessments to identify their strengths and weaknesses. It emphasizes finding a trading style that suits the individual, as enjoyment and alignment with one’s approach increase the chances of success. The program also offers practical guides on using indicators, topical webinars, and a library with over 200 hours of video content. The speaker highlights that while forex trading is complex and challenging, with proper knowledge and understanding, consistent success is achievable, as demonstrated by many students in their community.

26:10

VPA chatroom and platform integrations

26:10

The speaker discusses the VPA chat room hosted daily by Anna and themselves, where users interested in trading indicators can engage. They mention that all indicators are available at quantumtrading.com and compatible with platforms like MT4, NinjaTrader 7 and 8, and TradingView. Tradestation integration is coming soon, expected within four to five weeks, including Tradestation Global which works with Interactive Brokers accounts, offering a powerful trading combination. They highlight Tradestation’s advanced charting and radar screen features, expressing excitement about these developments. Additionally, the speaker notes that the VIX index is dropping slightly, suggesting a potential return of risk-on sentiment in equities, and points out that Anna’s detailed analysis is available for further insights.

27:04

Closing remarks and next session info

27:04

The speaker concludes by directing viewers to anacooling.com to explore books available on Amazon in both Kindle and paperback formats. They apologize for technical and charting issues during the session and express gratitude to the audience for their patience and participation. The session ends with well wishes for the rest of the trading day and an announcement of the next session scheduled for Thursday afternoon at 5:15 UK time, coinciding with the U.S. futures session.

By Anna Coulling – creator of volume price analysis