Lessons in volume price analysis trading forex in the London session

More lessons in volume price analysis trading forex in the London session using the Quantum Trading tools and indicators for MT5, NinjaTrader and Tradestation.

00:01

Introduction and webinar overview

00:01

The webinar begins with a welcome and an apology for the initial audio delay, emphasizing the hosts’ commitment to high-quality sound. Attendees are reminded of the trading disclaimer, highlighting the risks involved and advising not to use money one cannot afford to lose. The host briefly notes the diverse audience, including program students, quantum trading users, and some new participants, and offers a short introduction to the session.

01:01

Forex trading approach and VPA basics

01:01

The session explains the approach to the forex market, focusing on technical analysis combined with volume price analysis and fundamental factors. Price action on charts does not move in isolation but is influenced by various drivers and related markets that affect sentiment. Understanding these drivers and their interrelations helps make sense of price movements. The starting point for analysis is always the chart and volume.

02:12

Volume Price Analysis (VPA) is broken down into five key elements: volume, price action, candlestick patterns, and support and resistance levels. Important support and resistance zones are identified using both price-based and volume-based indicators, some of which have been custom-developed. These zones are critical in understanding where price might pause, continue, or reverse.

03:16

Traders must be aware of key price zones where price action may pause or reverse, which is where VPA elements come together. The difference between support/resistance and supply/demand is largely semantic, with supply and demand zones often marking potential reversal points due to shifts in buyer and seller dominance. Identifying whether these levels lead to major reversals depends on additional analysis of volume and price action.

04:28

Support and resistance with volume indicators

04:28

The discussion begins with an emphasis on understanding price action and candle patterns to grasp market behavior in a specific region. The best way to learn this is through practical observation. While foundational analysis focuses on price action, traders often supplement it with secondary indicators such as moving averages or Bollinger Bands, though their use varies by individual preference. The speaker notes their own proprietary indicators and highlights the importance of considering multiple time frames when trading, especially demonstrated through examples like the currency pair ‘cable’.

06:06

The speaker elaborates on their development of proprietary indicators tailored for various markets, with specific emphasis on forex trading. These indicators focus on assessing currency strength and weakness by tracking the flow of money—whether traders are buying or selling particular currencies like the pound or the dollar. This approach helps identify market sentiment and directional trends, illustrated by recent market events such as reactions following FOMC announcements.

06:05

Currency strength and flow indicators

06:05

The speaker explains how currency strength indicators help identify currency flows in the 24-hour forex market, which is divided into three distinct trading sessions. They emphasize that currency strength varies by time zone and local news events, affecting trading opportunities. The currency matrix ranks currency pairs to highlight where selling or buying pressure is strongest, offering potential trade setups. Additional tools like the currency array and heat map analyze strength and trends across multiple time frames.

07:11

The discussion introduces a forex trading program that allows participants to become funded traders, trading with company capital after a one-time entry fee. Traders can progress to managing accounts up to two million dollars. The speaker invites questions from the audience and plans to explain the program further during the session before moving on to analyze charts.

08:19

FOMC impact and market sentiment

08:19

The market is currently reacting to an overreaction from last week’s FOMC meeting. Despite initial shock and a market collapse, the actual announcements were not drastic, with interest rate hikes and tapering expected but likely not until 2023. Today is significant because Fed Chair Jerome Powell is giving a two-day testimony before a committee, which investors are closely watching amid ongoing market volatility.

10:10

The Federal Reserve committee members are generally divided into two camps: doves, who favor looser monetary policy and printing money, and hawks, who prefer tighter control to prevent economic overheating. Market reactions depend heavily on whether these members make statements contrary to their usual stance. Recently, even non-voting members like Bullard have influenced the market by making unexpectedly hawkish comments, contributing to uncertainty. This dynamic is affecting currency valuations, particularly the dollar, Japanese yen, and risk-sensitive currencies like the Australian and New Zealand dollars.

12:22

Dollar behavior and short squeeze explained

12:22

The speaker explains recent unusual behavior in the US dollar, highlighting a significant short squeeze caused by heavy shorting throughout the year. This forced traders to cover their positions, driving the dollar sharply higher. Additionally, the dollar typically strengthens during market stress, while the yen and Swiss franc also act as safe havens. The recent market recovery reversed some of these moves, creating uncertainty about future currency trends.

13:59

Market sentiment remains unclear due to conflicting signals about economic recovery and interest rates, influencing currency movements. The speaker references a matrix screenshot from before the New York market open, focusing on yen pairs as a key sentiment indicator. The Japanese yen strengthened overnight following a significant drop in the Nikkei, reflecting its dual role as a safe haven and risk barometer.

15:06

There were strong moves in currency pairs, especially emerging market currencies, driven by significant market activity the previous day. However, current trading is sluggish, with less pronounced movement and low volatility, as seen in hourly charts of the pound and other currencies. This lack of momentum signals a quieter market phase with reduced trading intensity.

16:43

Market conditions are described as dull and indecisive, with no large directional moves and overall sluggishness. Such markets increase trading risk because sudden volatility bursts can occur unexpectedly. Traders often face frustration and impatience in these conditions, requiring discipline and patience. The speaker questions whether to wait for clearer signals given the slow activity and limited news flow during the London session.

18:26

Market doldrums and trading risks

18:26

The speaker discusses the current market conditions, noting limited news activity and slight declines in futures, the Nasdaq, and small caps. Despite these movements, the market activity is subdued compared to previous days, setting a more cautious tone for potential trades.

18:54

The focus shifts to analyzing the cable (GBP/USD) currency pair across multiple time frames. The speaker highlights a recent strong downward trend following a congestion period and reflects on expectations about volume point of control shifts, particularly in light of the upcoming FOMC announcement.

19:30

The cable experienced significant moves downward, then a sharp reversal influenced by the US dollar and the FOMC event, returning it to the volume point of control. This suggests a potential congestion phase, which can still offer trading opportunities if the candle ranges within this phase provide sufficient volatility.

20:03

Trading in faster time frames becomes challenging during daily chart congestion phases characterized by narrow candles. The speaker explains their setup for trading cable, which includes multiple time frames—daily, hourly, 15-minute, 5-minute—and a Renko chart set to 2.5 pips, aiming to find actionable trades despite congestion.

20:42

Using Renko charts and indicators for entries

20:42

The speaker explains how Renko charts are used to identify price patterns and assist with trade entries by filtering out market noise. Renko highlights patterns such as double and triple tops and congestion areas, which can be combined with price-based levels like Camarilla levels to improve entry timing. Renko charts also help traders stay in trades by smoothing out volatility seen in traditional price charts.

21:52

Renko charts absorb price volatility and reduce the impact of wicks and congestion phases. The speaker discusses combining Renko with trend indicators like the trend dot and trend monitor to hold positions longer, rather than for exit signals. He illustrates this with a recent example of congestion during the London session, where volatility and volume patterns indicated indecision before a potential reversal.

23:29

The speaker describes a messy price action phase with mixed volume signals, noting that despite large candles, volume was insufficient to sustain a strong move. Key support and resistance levels from the Camarilla system, such as S3 and R4, often act as pause points. The price tends to hesitate near these levels, indicating potential reversal or consolidation zones.

24:28

The discussion focuses on dynamic volume point of control (VPOC) levels that shift with congestion phases, providing a platform for price support or resistance. The speaker highlights a recent downward move on decent volume, with minor buying attempts that pushed price back to the S3 level. This area often sees price oscillate around it, serving as a pivot for further movement.

25:32

Renko charts and trend indicators help maintain positions during sideways or congested price action. The speaker notes that despite some messiness in the volume and price data, Renko clearly shows pullbacks and support levels. He also points out that price had moved higher from earlier lows, signaling a potential continuation of the trend and emphasizing the importance of reviewing multiple timeframes to confirm moves.

27:17

The speaker explains how Camarilla levels on hourly charts provide stable support and resistance for the entire week, unlike lower timeframes which refresh daily. He points out a recent break from the S3 level and price targeting the R2/R3 levels on the hourly chart, indicating significant intraday pivot points. This helps traders understand key price targets and areas of potential reversal or continuation.

28:26

Focusing on the pound, the speaker notes that price movement is largely influenced by dollar strength or weakness. He prefers trading pound pairs due to familiarity but suggests monitoring other pairs like the Australian dollar for broader market cues. The segment ends with a transition to discussing indices and recent market activity.

29:34

Market manipulation and big operators’ role

29:34

The speaker discusses market reactions to significant events, like the recent announcement about interest rates. They highlight the contradictory market responses, where positive news about no rate rises for two years leads to rallies, while the possibility of a rate rise in two years causes plunges, questioning the logic behind such reactions.

30:15

They critique the market’s tendency to react dramatically to events that are far off in the future, pointing out the Federal Open Market Committee’s historically inconsistent interest rate decisions, which often change throughout the year, undermining the credibility of long-term market speculation.

30:41

The speaker explains that extreme market events should be viewed logically as opportunities created by big market players. These events serve to flush out weak sellers and panic-driven traders, allowing market makers to buy assets at lower prices and set the stage for a rally.

31:16

They elaborate on how these orchestrated market moves are designed to shake out weak holders, enabling strong players to accumulate assets before driving prices higher again, emphasizing that this is a deliberate and advantageous mechanism for market makers.

31:52

Traders are advised to recognize that market reversals following such flush-outs are inevitable. Instead of waiting, they should actively participate in the movement, as the market can move rapidly in the opposite direction, providing excellent trading opportunities.

32:19

Volatility triggers on indices explained

32:19

The speaker discusses a recent market reaction, describing it as short-term noise rather than a significant event. They focus on the indices, highlighting volatility triggers on the daily charts, particularly on the YM (Dow futures), which indicates potential congestion and a likely reversal within the candle’s range. These volatility triggers suggest the market may pause or reverse, reflecting shifts in risk sentiment.

33:16

The discussion continues with emphasis on the significance of daily volatility triggers, which are rare and meaningful. The ES (S&P futures) also shows a recent volatility trigger, underscoring a noteworthy market condition. The speaker stresses that signals on slower time frames like the daily chart carry more weight than those on shorter intervals, making these recent triggers important for anticipating future market behavior.

34:17

The importance of time frame in technical analysis is explained, with daily chart signals considered highly significant. The market is currently at a point of balance around the volume point of control (VPOC), indicating equilibrium. The NQ (Nasdaq futures) has continued its trend independently, while the presence of volatility triggers on multiple indices reinforces expectations of market congestion or reversal.

35:15

The speaker highlights a volatility trigger on the Pound Yen currency pair, following a large rally. Such extreme moves typically lead to congestion or a pullback as the market ‘catches its breath’ after a strong run. This is likened to a marathon runner needing recovery time, suggesting that after big moves, quieter or sideways trading days are normal before the next trend develops.

36:15

Trend development and volume analysis

36:15

The segment explains how volatility triggers can signal trend development, using a five-minute chart to illustrate the formation of a downtrend. The speaker highlights the importance of time alignment across platforms like NinjaTrader and TradingView, emphasizing that local timestamps simplify analysis compared to MT4 or MT5. The opening of the European market at 7:00 am local time brings immediate volatility, demonstrated by strong accumulation and distribution levels. These levels are visualized with thickness indicators that denote strength, showing repeated testing and holding of key price points.

37:16

As the London market opens at 8:00 am, volatility increases with notable price action characterized by wicks indicating buying and selling pressures. The market attempts multiple rallies but repeatedly fails to sustain upward momentum, collapsing back down each time. Volume surges during these attempts, especially at the London open, but resistance remains strong and selling pressure dominates. The price fluctuates between rallies and declines, showing weak attempts to break resistance accompanied by significant volume on selling candles.

38:41

The market continues to struggle with weak rallies and significant selling pressure, indicated by reversal patterns and volume spikes. Attempts to rally show signs of weakness, such as large upper wicks and failure to gain upward traction despite volume support. The price moves into a congestion phase around the volume point of control on the five-minute chart, with the trend monitor consistently indicating a strong downtrend (bright red). Similar price action patterns are visible on the ten-minute chart, confirming resistance overhead and failed breakout attempts, leading to volatility and congestion phases.

40:02

Analysis across multiple time frames reveals consistent resistance and congestion near the volume point of control. Candle patterns with large wicks and narrow bodies indicate attempts to rally that fail to sustain, signaling market weakness. Using multiple time frames helps traders visualize these dynamics more clearly, with volatility candles marking areas of increased activity. The speaker emphasizes the value of layering information from five, ten, and twenty-minute charts to build a comprehensive market picture.

40:55

The speaker discusses the benefits of using very short time frames, such as 15 seconds and one minute, for practicing volume price analysis (VPA) and reading market action quickly. These shorter intervals provide rapid feedback on volatility and volume patterns, helping traders recognize congestion and price-volume relationships. The discussion includes examples of rising volume accompanying price increases, as well as warnings when volume spikes are disproportionate to candle size, signaling potential weaknesses or shifts in market sentiment.

42:21

This segment focuses on benchmarking candle volume and spread to assess market strength and potential warning signs. Narrow spread candles with low volume typically indicate agreement between price and volume, suggesting stability. Conversely, high volume in narrow spread candles may hint at underlying selling pressure or weakening trends. The trend monitor and volume readings on very short time frames are used to identify subtle shifts, such as the appearance of doji candles and possible reactions, which could signal emerging changes in market direction.

43:23

Short-term volume price analysis examples

43:23

The speaker discusses price action around volume points of control, highlighting how these levels create clear channels of support and resistance useful for placing stop losses. They examine multiple time frames, noting early trend signals are not yet present but the price is building nicely and breaking through congestion areas.

44:25

Analyzing various currency indices on five-minute charts, the speaker notes the pound index beginning to find support and move upwards, which is favorable for the pound/yen pair as the yen falls and the pound rises. The dollar index is starting to decline, suggesting a potential rally in cable (pound/dollar) and other major pairs, while the euro remains in congestion after selling off earlier.

45:57

The discussion shifts to volume price analysis (VPA), emphasizing that in both uptrends and downtrends, rising volume is necessary to confirm moves, as it reflects the effort behind price changes. The speaker explains that when volume does not support a price move, such as during market crashes with low volume, it indicates a false move where market makers are not participating, allowing sellers to dump positions without genuine market momentum.

47:23

Further elaboration on VPA highlights how volume analysis helps identify genuine versus fake market moves. The speaker advises traders to use volume alongside logical analysis rather than relying solely on instinct. Understanding that interest rate changes are inevitable but not always impactful in the short term, traders can anticipate reversals when volume patterns signal weakening trends. This approach helps maintain calm and rational decision-making during market shifts.

48:59

Applying VPA logic to trading decisions

48:59

The speaker explains the importance of applying logic rather than emotion to trading decisions, focusing on volume price analysis around the volume point of control. They discuss setting trading levels based on market congestion and pivot points, considering both downside and upside potential. The analysis is described as simplistic but universally applicable across different charts and asset types. Observations include market attempts to rally with some weakness shown by candle wicks and volume, indicating support and resistance near the volume point of control. Traders are advised to wait for a clear break above certain levels before re-entering positions.

51:21

The focus shifts to a slower timeframe (five-minute chart) to assess longer-term market direction. The speaker highlights the challenge of pushing through high-volume areas that act as strong support or resistance levels. Volume point of control areas create significant barriers, requiring increased trading effort to overcome. The concept that volume-based support and resistance operates similarly to price-based levels is emphasized. Once price breaks past heavy volume zones, progress becomes easier as volume diminishes, facilitating smoother market movement beyond those levels.

53:20

Volume-based support and resistance levels

53:20

The speaker emphasizes basing trading decisions on chart analysis rather than theoretical risk-reward ratios. The chart reveals the likely opportunity a trade can deliver. They point out clusters of support levels on the accumulation distribution, explaining how multiple smaller levels together form a significant resistance area that capped price movements. The analysis highlights the importance of technical indicators over arbitrary ratios and the market’s indifference to individual traders.

54:51

The discussion continues with observations on price action failing to break through certain levels and moving downward. Trend monitors have turned red, indicating a potential strong support platform ahead, although price may move quickly through a low volume node before finding support at a major level. The speaker then shifts focus to currency indices, noting that the pound is creeping up slightly, the yen has started to decline which may boost US equity markets, and the dollar is weakening gradually. The euro remains range-bound. Political events on Capitol Hill may also influence market volatility.

55:56

The speaker briefly introduces a new topic involving cryptocurrencies, specifically Bitcoin, indicating ongoing work and analysis in this market area, signaling an expansion of their technical review beyond traditional currency and equity markets.

56:26

Cryptocurrency strength indicator preview

56:26

The speaker introduces a new cryptocurrency strength indicator that functions similarly to the currency strength indicator but is designed specifically for cryptocurrencies quoted against Tether (USDT). This indicator provides a visual representation of strength and weakness across multiple cryptocurrencies, allowing users to select or deselect which cryptos they want to display. It tracks trends, overbought and oversold conditions, and volatility, emphasizing the high price movement typical in cryptocurrencies. The indicator is developed primarily for TradingView, with uncertain plans for other platforms.

59:09

The new cryptocurrency indicator will be available free of charge as part of the full package of TradingView indicators. TradingView is praised for its large customer base and integration capabilities with various brokerage accounts via API, making trading seamless directly from the platform. The speaker demonstrates how users can customize their cryptocurrency charts by selecting from a list of available cryptos, with a probable maximum of seven or eight displayed at once.

01:01:25

The indicator highlights the role of Tether as a key driver in cryptocurrency market movements, often showing divergence when Tether rises strongly while the broader crypto market moves oppositely, signaling strong trends. Generally, cryptocurrencies tend to move together on slower timeframes, resembling a currency matrix where universal buying or selling trends can be identified. The speaker mentions plans to develop additional features like heat maps and matrices to illustrate trend strength and indicates that releases will be gradual.

01:04:06

The speaker discusses the testing and upcoming release of the cryptocurrency strength indicator, emphasizing the preparation of support materials and phased launch through Quantum Labs. They then analyze recent market movements on various timeframes, highlighting the transition phases in trend monitors that identify strong trend changes without always following a fixed color sequence. The trend monitor’s ability to adapt to price action nuances is praised, with daily charts showing no significant changes during this period.

01:06:03

To conclude, the speaker points viewers towards the comprehensive Forex education program available at Quantum Trading Education. This extensive course took two years to develop and includes approximately 450 lessons, aimed at providing a deep and thorough understanding of Forex trading.

01:06:42

Quantum Trading education and funded program

01:06:42

The video introduces a comprehensive trading course with 250 to 300 hours of video content designed to provide everything needed to trade the market confidently. The program is extensive, not a brief course, and is suitable for both forex and stock traders since forex acts as the central gateway for money flow in various markets.

01:07:13

Forex is described as the kingpin market because all asset sales eventually convert to cash through it. This central role makes forex sentiment a clear indicator of market trends, influencing everything else. The importance of forex reinforces its role as the foundation for trading other asset classes.

01:07:38

The funded forex program is introduced, offering students the chance to trade with company capital starting with accounts of $5,000, $10,000, or $15,000. Traders must meet a profit target to prove consistency, after which they receive a 35% profit share and can access a funded account four times larger than the initial size.

01:08:19

After proving trading consistency and risk management, students can trade larger accounts up to $60,000 starting from $15,000. The program also allows expansion into indices like the DAX, US and UK indices, and gold, broadening trading opportunities beyond currency pairs.

01:08:57

Traders earn monthly profit rebates starting at 50%, with potential to double their account size repeatedly up to $2 million. Upon reaching $1 million in account size, profit share increases to 60%. The program provides substantial earnings with no personal financial risk, as traders use company funds.

01:09:31

Participation in the funded program is optional and designed to help students leverage their trading skills on large accounts, replicating strategies used on smaller accounts. This approach allows traders to gain experience managing significant capital without risking their own money.

01:10:01

The speaker mentions the website annacooling.com, where their books are available on Amazon in Kindle and paperback formats. These books have received hundreds of five-star reviews, reflecting positive feedback from readers on the trading methodologies presented.

01:10:27

Quantum Trading indicators are available at quantumtrading.com for various platforms including MT4/5, NinjaTrader, TradingView, and TradeStation. A powerful radar screen tool driven by Interactive Brokers is highlighted, demonstrating the advanced technology supporting the trading strategies.

01:10:57

Quantum Trading indicators and platform integration

01:10:57

The speaker explains how TradeStation Global operates using version 9.5, highlighting the trend monitor and radar screen tools that show currency trends, particularly selling of the New Zealand dollar. They then describe TradeStation Securities, which uses version 10 and a powerful radar screen capable of running up to a thousand cells simultaneously. The speaker emphasizes their policy of crediting customers when upgrading indicators or programs, and offering free future indicators for those who invest in the full package across platforms like TradingView, MT4/5, and NinjaTrader as a way of appreciating their support.

01:12:22

The session concludes with the speaker noting the time until the next live update and wishing the audience a good rest of the trading day and week. They thank viewers for attending, express hope that the content was useful, and encourage everyone to stay safe and enjoy trading.

01:12:52

Webinar closing remarks and thanks

01:12:52

The speaker concludes the session by expressing familiarity and saying goodbye, indicating the end of the interaction.

 

By Anna Coulling – creator of volume price analysis