More great price action on the US index futures with the YM emini leading the way

More great price action on the US index futures with the YM emini leading the way

Some terrific price action yesterday on the US markets with the YM Emini future leading the way higher with a solid and straightforward trend. In this video, we show you how to blend time and non-time-based charts using both tick and renko charts.

00:01

Introduction and New Year wishes

00:01

The speaker welcomes viewers to the first webinar of 2021 focused on day trading in the US markets. They acknowledge the challenges of the past year, express hope for improvements due to vaccines, and thank attendees for joining. The session will include market analysis, particularly of US markets, and features the speaker along with Anna and her husband David.

01:15

Day trading markets and disclaimer

01:15

The speaker introduces day trading, explaining it can involve various markets such as stocks, commodities, treasuries, and forex pairs. They emphasize that their methodology and indicators are versatile and applicable across these markets and time frames. Before proceeding, they highlight an important disclaimer stating that trading is risky and viewers should never use money they cannot afford to lose. Additionally, the session is for market analysis and education only, not trading or investing recommendations.

02:24

Volume Price Analysis methodology

02:24

The speaker emphasizes that their approach does not involve frequent buying and selling but relies on volume price analysis (VPA), which combines price action with volume as the only two leading indicators. They highlight the popularity of this methodology, noting nearly a thousand mostly five-star reviews, demonstrating its positive reception and impact in the trading community.

03:33

The methodology is supported by a well-regarded book and a companion book containing over 200 practical examples, mainly focused on stocks, indices, and commodities, with a forex version available. The foundation of the trading approach rests on five pillars, including volume and price action, primarily using candlestick charts and patterns, although some forex students may use bar charts.

04:45

About 20 years ago, bar charts were the dominant charting method, but candlestick charts have since become more widely used, especially on professional platforms like Bloomberg terminals. The speaker notes the increasing acceptance and prevalence of candlestick charts in trading analysis.

05:24

Support and resistance are critical components of the methodology, determined through various combined methods. These form part of the core trading tools, which are supplemented by proprietary indicators developed by the team, enhancing the overall effectiveness of the trading system.

06:01

Price cycle and trading indicators

06:01

The speaker discusses various technical indicators used in trading, such as moving averages, fractals, Gann, and Fibonacci, emphasizing that Volume Price Analysis (VPA) is the primary method. VPA helps traders identify the current phase within the price cycle, which includes accumulation, trending, consolidation, distribution, and downtrends. These cycles are fractal, occurring similarly across different time frames but varying in duration. VPA aids in determining whether a trend will continue, if a reversal or pullback is occurring, and the risk associated with these movements. By combining VPA with other indicators, traders can better interpret price action phases and apply suitable strategies. The speaker suggests that understanding this is best achieved by examining charts, before briefly mentioning the impact of current fundamental news.

08:28

US political impact on markets

08:28

The discussion focuses on recent disappointing ADP employment numbers and upcoming key events such as the US non-farm payroll report and the Federal Reserve minutes. Attention is given to the US political landscape, particularly the likely Democratic clean sweep in the Senate following runoff elections in Georgia, which would give President Biden a clear path to implement his agenda until the 2022 midterms. Market speculation revolves around the winners and losers of a Democratic-controlled government, with large tech companies potentially facing antitrust actions, green energy infrastructure as beneficiaries, and possible weakness in the US dollar due to increased quantitative easing. Market reactions are mixed: the Dow futures are rising while the tech-heavy Nasdaq is struggling, reflecting investor concerns over the future of dominant tech firms like Facebook and Google amid regulatory pressures.

12:01

Risk on/off and market sentiment

12:01

The speaker discusses the Australian dollar (Aussie) futures and spot versions to explain the concept of risk-on and risk-off market environments. A risk-on market indicates positive sentiment, often reflected in instruments like the Aussie dollar, copper, and global equities including the Nikkei and South Korean Kospi indexes. The Aussie dollar is highlighted because of its close economic ties to China, which significantly influences the global economy. The segment emphasizes how these instruments serve as indicators of market risk appetite.

14:19

The discussion shifts to other market indicators that signal risk-on or risk-off sentiment, such as the VIX volatility index, options markets, gold, treasury bonds, Japanese yen, and TIPS (Treasury Inflation-Protected Securities). The speaker mentions upcoming tools like Train Station and Radar Screen that will help traders monitor these diverse markets more efficiently. They stress the importance of understanding the broader market landscape and adopting a multi-dimensional approach, regardless of trading style or sector, to accurately interpret price action drivers.

16:11

The speaker highlights the role of volume in confirming the validity of price action, distinguishing genuine moves from potential traps. They stress the importance of volume price analysis (VPA) in making informed trading decisions. The segment ends with the speaker preparing to switch focus to a daily chart on the spot market for further analysis.

16:46

Aussie dollar price action analysis

16:46

The discussion begins with analyzing slower time frame charts to understand the overall price action, specifically looking at the Aussie dollar from late September to November. The market was moving sideways, oscillating around the volume point of control, indicating a consolidation phase rather than a clear trend. This sideways movement suggested that faster time frames would show choppy, whipsaw price action, which can be deceptive if only daily candles are observed. The consolidation was not very volatile, as seen from the moderate candle wicks, implying relatively lower risk during this phase.

19:04

The speaker explains how risk management should adjust based on market volatility, recommending smaller position sizes during volatile phases and larger ones during stable periods. The chart shows a reasonable uptrend with some pullbacks and periods of extreme price action, particularly around the time of an election, illustrating how external events influence market behavior. Towards the end of December, signs of potential weakness appear, including a shooting star candle and a reversal, but strong buying resumes, indicating market resilience despite uncertainties.

20:10

Recent market activity includes a sharp upward move with wide-spread candles and mixed wicks signaling uncertainty, partly due to political results. The market’s adaptive nature is emphasized, with the phrase ‘adapt or die’ highlighting the necessity for traders to adjust strategies to survive. The speaker has been waiting for a market reversal, using a currency strength indicator tailored for futures that excludes irrelevant currencies. Currently, the indicator shows no clear divergence, making it difficult to confirm a strong directional move.

21:21

Analyzing different time frames of the currency strength indicator reveals mixed signals: the shorter three-minute chart shows currencies clustered near the center, while the ten-minute chart hints at a vague bullish bias. The one-minute chart indicates a consolidation phase with some past volume spikes, but currently price movement is sideways. The speaker expresses caution, preferring to wait for a clearer reversal signal before entering a trade.

22:58

Entry confirmation is sought using a Renko chart with two- and three-pip settings alongside a trend monitor. Price is moving sideways without a clear breakout from congestion, so the trader decides to wait. Recognizing the trading environment helps determine whether to act or stay patient. Although there was strong buying on the ten-minute chart, the overall trend remains uncertain and in consolidation. The speaker encourages patience and openness to either a reversal or continuation, emphasizing that time will reveal the market’s direction. The segment closes with a transition to another speaker and greetings to the audience.

24:48

The new speaker welcomes viewers, acknowledges the recent Christmas period, and mentions the UK’s current tier five lockdown with strict restrictions expected to last several weeks. This brief personal and contextual update sets the stage for the upcoming discussion.

25:29

US indices and trend monitoring

25:29

The speaker begins by analyzing market indices, focusing on the YM, NQ, and ES on different timeframes. They highlight a strong upward move in the YM and how the YM and ES are pulling the NQ higher, noting a significant price wick formation indicating upward momentum.

26:01

The current market picture shows a bullish trend with normal volatility levels. The speaker emphasizes the usefulness of NinjaTrader for viewing local times and monitoring real-time market conditions, reinforcing the bullish momentum.

26:27

The discussion shifts to market volume and timing, noting increased input volume as the London cash market opens alongside Globex. Despite some earlier negativity, the markets are now rallying strongly and moving in unison, creating multiple trading opportunities.

26:51

The speaker reviews multiple timeframes on the YM, showing strong movement across 15-second to 15-minute charts. They also examine the US dollar’s recent rally and slight pullback, setting the stage for how currency movements relate to equity rallies.

27:24

For a strong equity rally, the speaker notes the importance of a weakening dollar and yen, which currently looks positive. They explain the trend monitor system, highlighting how it detects trend pauses and reversals, and how this information is crucial for trading decisions.

27:54

The trend monitor’s slower, more considered analysis of the market trend is described, showing how it distinguishes between minor pullbacks and true trend reversals. This tool helps traders stay aligned with the primary uptrend despite short-term fluctuations.

28:19

The segment concludes with an introduction to using tick charts and renko charts in combination with time-based charts. The speaker emphasizes the importance of identifying transitions between primary and secondary trends to maintain successful trades.

28:46

Renko and time-based chart trading

28:46

The speaker explains using various trading platforms like Renkon TradeStation or MT4/MT5 and emphasizes aligning indicators with a lower timeframe, specifically a 15-second chart. Each box on the chart represents nine points, which is the optimal setting for the current fast-moving market. On a mini Dow futures contract, each point is worth $5, so each box equates to $45, representing a significant potential gain. They then demonstrate adjusting the timeframe to 30 seconds, aligning it with the chart below, and note that the points have changed to 15.

29:41

The discussion continues with the slowest timeframe, one minute, where the equivalent brick size increases to 21 points. The speaker highlights that as timeframes get slower, the brick sizes become larger. They explain the behavior of trend dots, which closely follow the price action by moving through the candle or bar, indicating shifts in momentum. The trend dots roll over, turn red during pullbacks, and then move back up during minor reversals, showing detailed price dynamics.

30:41

The speaker describes the trend monitor’s stability despite minor pullbacks and temporary transitions. Even when trend dots indicate a brief reversal or pullback, the overall trend monitor remains consistent, confirming the trend has not reversed. Once the pullback ends, trend dots return to blue and are supported by the trend monitor across different time horizons. This approach combines both non-time-based and time-based analysis to provide a comprehensive view of market trends.

31:12

Volume analysis and market effort

31:12

The discussion begins by explaining why volume price analysis (VPA) cannot be effectively applied to Renko or tick charts due to lack of differentiation in volume representation. Instead, time-based charts are preferred for clearer volume analysis. Observations on recent price action reveal some emerging weakness indicated by a narrow spread candle combined with decent volume, suggesting the potential for congestion or a pause rather than a full rollover.

32:06

The speaker elaborates on congestion phases in the market, highlighting an example where price rises while spreads narrow, forming an arc that signals weakening momentum. Volume is falling, indicating effort without strong results. This suggests a tiring price action where traders may start taking profits, leading to increased volume but limited selling pressure, which provides some support and indicates the market is not ready to fall significantly.

33:01

Further analysis emphasizes that despite some selling pressure during congestion, buying support remains present. Volume levels remain similar across certain candles, indicating ongoing interest from buyers and suggesting the market expects further upward movement. The price is approaching an area of relatively light volume, which implies less resistance ahead, supporting the potential for continued price advances.

33:49

Volume is compared to traditional support and resistance concepts, where areas of low volume act as weaker barriers to price movement. This concept is illustrated by price rapidly moving through a low-volume area, indicating little resistance from either volume or price levels. The accumulation distribution indicator also supports the idea that there’s minimal support in these zones, making volume a powerful tool for understanding price dynamics.

34:48

The volume begins to build in the current price region, with expectations for price to push higher through this area and beyond. The Renko chart’s clean price action is praised for its clarity, with significant moves measured in large brick sizes representing substantial trading opportunities. The speaker contrasts this with other markets where traders might aim for small moves, highlighting the scale and volatility differences between instruments like the YM and the NQ.

35:44

The final segment discusses the merits of trading during the Globex session, noting it can be advantageous as one is not competing against the high-frequency algorithms that dominate during cash market hours. Returning to the time-based charts, the speaker notes the market is approaching a pause, setting the stage for further analysis on a 15-minute timeframe.

36:26

Seasonal volume and market context

36:26

The speaker explains that volume is falling in a slow timeframe, which is expected during low activity periods such as holidays. They emphasize the importance of considering volume in the context of the time of day, the trading session, and seasonal factors. Despite a rising market with falling volume, a surge typically occurs at market open (2:30), followed by a settling into a steadier rhythm. They also highlight the importance of analyzing volume within the broader trading environment and mention examining tick charts with various time intervals to better understand volume patterns.

38:13

Non-time based charts optimization

38:13

The speaker discusses non-time-based charts like Renko and tick charts, emphasizing the challenge traders face in setting optimal parameters. They introduce two indicators, including the Renko optimizer, which automatically determine the best settings by combining volume and price analysis. Each market has a unique profile, so the tool adapts settings accordingly, removing guesswork from the process.

39:10

The tool uses a Fibonacci-based mathematical method to provide stable settings that adjust less frequently, allowing traders to select values close to these figures. This adaptability is useful for markets like Globex, where activity fluctuates. The indicators also provide a visual of market activity levels, with green and orange indicating desirable activity and red signaling low participation and congestion.

40:08

The speaker explains how to implement these settings in the NinjaTrader platform and highlights the advantages of non-time-based charts. Tick charts close candles after a set number of ticks rather than after a fixed time, so candle duration varies with market speed. This variability allows traders to observe momentum more effectively, seeing the market speed up or slow down, unlike static time-based charts.

41:17

Non-time-based charts reveal market momentum by reflecting the actual pace of trades, unlike time-based charts which display fixed intervals. Combining tick charts with volume-based charts merges the benefits of both. The speaker points out a large volume spike within a 15-second time frame that resulted in little price movement, illustrating how volume can signal potential market weakness or sideways behavior despite high activity.

42:13

Analyzing subsequent candles, the speaker notes volume spikes accompanied by limited price movement, indicating market fatigue and potential weakness. They observe subtle early signs of this weakness in smaller green price action slivers and confirm the pattern with repeated volume surges that fail to push prices higher. The speaker also mentions monitoring this activity on TradingView to compare real-time data.

43:12

Forex session and micro lot trading

43:12

The speaker discusses closing out a small FXCM trading account with a profit of around $30 to $33, trading only one micro lot. They highlight that despite small amounts, they managed to capture approximately 320 pips. The trading strategy involves managing up to four micro lots simultaneously with stop losses in place. The speaker also comments on current market conditions, noting a slight rise in the dollar which is causing some weakening in indices sentiment.

44:14

Attention shifts to the VIX index, which is currently down and flattening around 22.44. Despite recent market momentum and volatility, the VIX remains significantly lower than expected, indicating that market fear or volatility is subdued relative to the strong upward trend seen over the past weeks and months.

44:41

VIX and market volatility outlook

44:41

The discussion focuses on the high volatility in the U.S. election season, driven by a large volume of traded options and promotion by free trading platforms. This volatility is expected to decrease once the Senate situation is resolved and the new president takes office, assuming markets continue to rise. Momentum and trading volume are noted to surge, with adjustments needed for tick speed to better analyze the data. The segment concludes as the speaker prepares to pass the discussion to another participant named Anna.

45:45

Trading futures access alternatives

45:45

The speaker discusses trading futures, specifically the YM futures contract for the Dow Jones, and alternative access methods beyond opening a futures account. One option is trading ETFs, while another common approach on forex platforms like MT4 and M25 brokers is trading synthetic versions as CFDs tied to Dow Jones data. These synthetic instruments, such as the US 30 Cash, allow traders to use volume price analysis across various timeframes, replicating futures market behavior with smaller capital.

46:59

Using NinjaTrader, the speaker highlights that Dow Jones futures can be accessed and analyzed similarly through synthetic CFDs. The market is currently in a consolidation phase, indicating indecision while waiting for a clear directional signal. The recent election event provided the clarity the market needed, resulting in a positive reaction for the Dow Jones despite mixed impacts on sectors like tech. The market now has certainty, which is generally favorable for trading conditions.

48:15

The market is breaking out of its previous consolidation, driven by expectations of further quantitative easing (QE) stimulus. The Dow Jones has cleared the key 30,000 level, experiencing some volatility but showing strong upward momentum. The Renko chart on a three-minute timeframe highlights this move with reduced noise, emphasizing a clean breakout from the volume point of control near 30,400. Minor pullbacks are considered normal and not cause for concern.

49:25

Traders should wait for a pause or consolidation before expecting any reversal, as the Dow has surpassed several resistance levels, including R4 and R5 on the hourly chart, with potential stops near 30,900. While broker calculations for these synthetic instruments may vary slightly from official futures values, they offer accessible trading opportunities across many asset classes, including commodities and stocks. The speaker monitors the hourly chart for signs of a volatility candle, which could signal a temporary pause in the strong upward move.

51:09

Stocks scanning and intraday trading

51:09

The speaker demonstrates the use of volume price analysis (VPA) on a tech stock within a futures account, highlighting that VPA is effective not only for long-term investing but also for day trading.

51:47

The discussion focuses on the powerful scanning feature of the TradeStation platform called the radar screen, which allows users to screen up to a thousand charts simultaneously and apply indicators, effectively providing miniature charts within each cell.

52:21

The speaker explains how the radar screen’s trend monitor shows an extensive congestion phase on the chart, emphasizing the value of a strong screener that can apply indicators or filter stocks efficiently.

52:50

It is noted that during the holiday season, trend signals such as mild reddening in the trend monitor should be interpreted with caution, as such patterns are expected and less significant compared to other times of the year.

53:15

The speaker highlights a bullish breakout occurring after the holiday season, supported by a strong platform of support and positive volume dynamics, indicating a promising start to the new year.

53:40

The discussion covers volume point of control levels and accumulation/distribution indicators, explaining how congestion phases create strong support and resistance zones, and noting that the stock has broken through a low volume area into a higher volume region.

54:08

The analysis continues by observing the stock moving into a low volume node with decent volume below recent gaps, suggesting a stable upward movement that can be analyzed on different time frames such as daily, weekly, or monthly.

54:29

Wrapping up, the speaker briefly checks gold and YM indices, noting that the YM is still moving higher and settling in, indicating a stable market condition at that moment.

55:03

Trend management and trading psychology

55:03

The speaker discusses observing a series of consistently rising candles in trading, emphasizing the importance of staying invested during such trends despite minor pullbacks. Emotional reactions often cause traders to prematurely take profits, which leads to regret. The core trading principle highlighted is accepting many small losses while capturing fewer, larger gains to be profitable over time.

56:04

The presenter explains that although losses are frequent, they are small and manageable, balanced by significant winning trades. They note a current rapid upward market move, which is unusual since markets typically decline faster than they rise. The use of trend monitors across multiple time frames shows consistent positive signals, making trading straightforward. Additional market observations include selling pressure on the yen, falling energy prices, a declining VIX, and a weakening dollar.

56:57

The session concludes with a reminder to visit quantumtrading.com for resources, including the recent release of TradeStation. The rollout occurred softly over the Christmas holiday and went live recently. The host wraps up to attend to a personal break.

57:28

Platform updates and indicator development

57:28

The speaker discusses the availability of four trading platforms: MP45, NinjaTrader 78, TradingView, and TradeStation. Customers who have purchased indicators can upgrade to a full package or education program using credit for previous purchases, ensuring they don’t pay twice. The team is actively working on improvements, particularly on TradeStation and TradingView. Notably, TradingView now supports object and line drawing features and PineScript as of the last year’s release, and efforts are underway to port all outstanding indicators to TradingView.

58:26

On TradingView, users will receive a full set of indicators mirroring those on MP45. If they already own the full package, they will get these new features free of charge. The pricing for TradingView packages will be adjusted to align with MP45, which the speaker views as a positive development.

59:14

Complete Forex trading education program

59:14

The program offers a comprehensive forex trading education, including new indicators available free to full package users. It aims to equip traders with the knowledge, tools, and expertise needed to trade forex confidently. Additionally, the funded forex program allows participants to trade with capital provided by the program, starting from $5,000 and scaling up to $2 million through a series of evaluation stages with clear, simple targets.

01:00:13

Traders begin with an evaluation account where they must meet targets within 12 months; upon success, their capital is multiplied progressively, reaching up to $2 million with no further time limits. Participants can trade any style they prefer under defined risk and money management rules. Profit sharing is generous, with 35% paid as a lump sum after the evaluation stage and 40% paid monthly at higher levels. The program assumes all risk by providing the trading capital and focuses exclusively on the forex market.

01:01:40

Funded Forex program details

01:01:40

The speaker mentions that Anna’s books can be found on annacooling.com and are available on Amazon in both Kindle and paperback formats. They express pride that the books have been widely adopted in China, Taiwan, and Vietnam. Recently, deals have been signed in Vietnam to publish the stock trading and VPA books locally. The speaker also invites contacts for potential publishers in Europe.

01:02:11

Books, publishing and webinar plans

01:02:11

The speaker shares links to the complete forex program and platforms, including the funded forex program. They mention upcoming webinars that will be sent via email, focusing on new content such as platform-specific sessions, particularly for TradeStation which caters to stock trading. The speaker expresses gratitude to the audience, appreciates being back at the trading terminals after a break, and wishes everyone a successful and safe trading week before signing off.

By Anna Coulling – creator of volume price analysis