More volume lessons for forex traders using the GBP/NZD

More volume lessons for forex traders using the GBP/NZD

Volume price analysis is a powerful methodology and one which can be used for all markets and instruments and even in spot forex, where we use tick volume as a proxy and one which works perfectly as you will see in this video.

00:01

Introduction and market context

00:01

The webinar begins with a warm welcome and a note on the unusual summer weather in the UK. The presenter highlights the current busy market activity, which is unusual for summer, and hints at significant events expected by the end of the trading session and the following day. After a brief disclaimer reminding viewers about the risks of trading and the importance of only using money they can afford to lose, the presenter acknowledges the diverse audience, including both new and returning participants, welcoming everyone to the session.

01:33

Session overview and trading focus

01:33

The session introduces day trading and intraday trading, focusing on identifying trading opportunities in US markets, indices, commodities, and forex. The approach centers on volume price analysis (VPA), which examines price action alongside trading volume to determine the authenticity of market moves. The presenter emphasizes that markets are often manipulated, so understanding the relationship between price action and volume is crucial. Recognizing VPA signals across different time frames and markets helps traders anticipate significant moves, often contrary to the majority market sentiment. Further details are explained in the accompanying book.

03:11

Volume price analysis and books

03:11

The speaker discusses a comprehensive guided volume price analysis book, which also has a forex version titled ‘Forex for Beginners.’ Both books include practical example books to help learners understand the methodology through worked examples. The concept emphasizes recognizing volume price analysis signals as they recur, improving chart reading skills significantly. The speaker likens this improved understanding to putting on reading glasses and suddenly seeing clearly, highlighting how recognizing these signals enhances the ability to interpret charts effectively.

04:16

Chart examples and currency focus

04:16

The speaker introduces chart examples to illustrate trading signals, specifically the hammer candle pattern appearing at the end of a downtrend on a faster timeframe. They explain how this pattern manifests differently when viewed on slower, higher timeframes, demonstrating a two-bar reversal. Additionally, a recent strong upward trend in the Pound/New Zealand Dollar currency pair is highlighted, noting the Pound’s overall impressive performance across multiple pairs and timeframes.

05:28

Current market conditions and Fed update

05:28

The markets are unusually active despite it being the typical summer slowdown period. The Federal Reserve, led by Jay Powell, has committed to doing whatever it takes to support the economy amid ongoing challenges posed by the virus. Recent data revealed a historic economic contraction, with second-quarter GDP falling by 32%, the worst drop in two centuries, surpassing recessions like the Great Depression. Additionally, the U.S. faces a looming fiscal cliff as Congress has yet to finalize unemployment benefits, risking further economic decline. Unemployment claims remain extremely high, and entire industries, such as airlines and companies like Boeing, are experiencing severe disruption.

08:16

Tech sector and upcoming earnings

08:16

The discussion focuses on the current state of various industries, highlighting that while sectors like travel and leisure are struggling, the tech industry remains relatively resilient. The speaker notes that the Nasdaq index has been fluctuating but failed to sustain a breakout above the 11,000 level, which was identified as a key target. Market movements have been inconsistent with alternating up and down days. Additionally, significant tech companies including Apple, Facebook, Amazon, and Alphabet are set to report earnings after the market close, indicating a potentially volatile trading day ahead.

09:24

Economic data and market volatility

09:24

The video explains that Fridays mark both the end of one trading month and the start of another, creating a unique overlap in market activity. It highlights the release of PMI data from China, which typically occurs at the beginning of the month but can sometimes fall on the last day of the previous month. This timing leads to a confluence of events that increase market volatility and manipulation, especially visible on trading charts.

10:00

Using indicators for trading signals

10:00

The speaker introduces volume price analysis (VPA) as a method to gain better control and insight when trading, despite market uncertainty. They highlight how VPA signals, once validated, can predict upcoming market moves. Using the Pound-New Zealand pair on a two-minute chart as an example, the speaker mentions specific indicators developed for forex trading, such as the currency strength indicator, which tracks individual currency movements and helps identify trading opportunities.

12:14

The discussion focuses on the tick speed indicator, which measures market activity and participation levels, particularly useful on faster charts. The speaker explains how analyzing volume and candle patterns together can indicate potential market anomalies. For instance, a candle with high volume but a very narrow spread could signal a suspicious market condition, serving as an early warning for traders.

13:55

The speaker elaborates on the significance of analyzing multiple time frames for better trading signals. They compare two-minute and five-minute charts where a suspicious candle with high volume but narrow spread appears near a key resistance level (0.9705). This anomaly precedes a two-bar reversal pattern, signaling a potential trend change. The importance of noting significant support and resistance levels across different time frames is emphasized, as they often trigger price reactions.

16:08

The reversal move is confirmed by a fast and volatile drop following the anomalous candle. The speaker highlights how their proprietary indicators, including the tick speedometer, validate this move by showing high market participation. They also mention the use of camarilla levels, a type of support/resistance indicator with six levels, as an alternative to Fibonacci retracements for identifying key price points where reversals are likely.

17:50

The speaker illustrates how the weekly camarilla resistance level (R4) aligns with the observed reversal, reinforcing the signal’s strength. They note that daily camarilla levels appear on time frames up to but not including the hourly chart. Further confirmation comes from a bearish engulfing candle on the 10-minute chart and a shooting star candle with heavy volume on the hourly chart, all indicating a likely market reversal at key resistance.

19:48

Multiple time frame analysis is emphasized as essential for interpreting VPA signals effectively. The speaker mentions different reversal patterns, such as two-bar reversals and tweezer tops and bottoms, which are useful for traders focusing on reversals. They suggest that traders can choose to act on signals in faster time frames for a more aggressive approach or wait for confirmation in slower time frames for a conservative strategy, highlighting flexibility in trading styles.

21:28

The segment concludes with advice on customizing the choice of time frames for trade entries and the implications for stop loss placement, which will be discussed in future sessions. The speaker invites questions from the audience and signals a transition to another presenter, emphasizing ongoing support and interaction during the webinar.

By Anna Coulling – creator of volume price analysis