Price based or volume based support and resistance – which is important? Both!

The importance of support and resistance

In the latest session from the forex trading webinars, I explain the importance of support and resistance in the context of some recent trades on MT4/5 and also on TradingView.

00:04

Introduction and trading disclaimer

00:04

The session begins with a welcome and an apology for the delayed start. The host reminds viewers of the trading disclaimer, emphasizing the risks involved in forex trading and advising against using money that one cannot afford to lose. The session aims to review current market conditions and chart analysis.

00:32

Overview of volume price analysis (VPA)

00:32

The speaker introduces the focus on the forex market using a methodology called volume price analysis (VPA), which combines price action and volume to predict price movements. This approach is not original but builds on long-established principles, including those by Richard Wyckoff from the 1920s and 30s. The methodology is rooted in understanding human behavior and emotions that drive the markets, such as greed and fear.

01:43

VPA examines the close relationship between price and volume as leading indicators to help forecast price direction. The methodology extends beyond just these two factors, incorporating additional elements developed by the speaker’s team. Resources and books explaining VPA in more detail are available for those encountering the method for the first time.

02:12

3D approach: charts, fundamentals, politics02:12

The segment introduces a multi-dimensional approach to understanding the forex market, emphasizing that chart reading alone is insufficient. It highlights the importance of considering fundamental factors and related markets alongside technical analysis. Additionally, a political dimension is discussed as a crucial influence, though this may lessen with changes in political leadership. The speakers mention developing a comprehensive program that builds on this integrated method.

03:15

Comprehensive VPA trading program details

03:15

The program offers a comprehensive learning experience beyond what books provide, especially in technical analysis and volume price analysis (VPA) based on Richard Wyckoff’s work. It includes five modules covering psychology, fundamentals, and more, with about 200 videos and 450 lessons in total. Additionally, students have the opportunity to participate in a funded trading element where they can trade with the program’s capital after passing an evaluation, potentially managing a two million dollar account. More information is available at quantumtradingeducation.com.

05:07

Specialist forex indicators and dashboards

05:07

The program includes specialized indicators developed for analyzing the forex market by breaking it down into individual currencies and currency pairs, focusing on the flow of money. Four specific forex indicators are featured in the currency dashboard, which can also be purchased individually. Additional indicators have been created to support the Volume Price Analysis (VPA) methodology. The best way to understand how these tools and VPA come together is through chart analysis, which is the next focus. The presenter notes that reviewing these charts, particularly on hourly and another unspecified timeframe, is their usual starting point each morning.

06:18

Preferred timeframes: hourly and 15-minute charts

06:18

The speaker discusses the use of multiple time frames in trading, noting that while some traders use three or four, most can effectively manage two. The choice of time frames depends on the trading platform, with MT4 offering limited options, MT5 providing more, and platforms like NinjaTrader and TradeStation allowing even finer increments. The speaker prefers using the hourly and 15-minute charts, as the hourly chart provides a good overview of recent market activity since the Asia session and the previous day, offering useful context without being too broad like the four-hour or daily charts.

08:04

The 15-minute chart offers a closer view of price action that is still manageable for traders to follow. The discussion highlights the British pound as a key focus in European and London trading sessions, alongside significant movements in the euro. These time frames help traders stay updated on market dynamics and price trends in relevant currency pairs.

08:37

Current currency trends and sentiment

08:37

The speaker discusses the ongoing sell-off observed in currency markets, highlighting the importance of different timeframes for analysis, such as the hourly and 15-minute charts, with the 15-minute chart showing a continuation of the hourly trend. They explain that when a market reaches overbought or oversold conditions, a pullback or reversal is likely. Traders can use the hourly chart as a benchmark and lower timeframes like the 15-minute or 5-minute charts for entry points. The speaker also mentions using Renko charts, which are not time-based, to better understand market movements and sentiment.

09:47

The discussion shifts to market sentiment, described as a spectrum ranging from complacency and euphoria to fear and greed, which is reflected in the buying and selling of specific currencies and currency pairs. Key currencies to watch for sentiment signals include the Australian dollar, New Zealand dollar, Canadian dollar, and especially the Japanese yen. The continued selling of the Japanese yen indicates market mood shifts, which can be further understood by checking futures market data on platforms like investing.com. The market sentiment has improved compared to the previous day and was notably positive on Friday despite poor jobs data.

10:53

US dollar selling off and market futures update

10:53

The market mood is becoming more positive, reflected in the futures for the Dow Jones, S&P 500, and Nasdaq, which are all showing gains. The VIX index is in the 20s, indicating that market volatility is not elevated.

11:26

Using a currency matrix tool, the strongest and weakest currency pairs are identified based on current buying and selling activity. The US dollar is notably selling off, with strong moves seen in the Australian dollar and Canadian dollar pairs.

12:27

Examining shorter time frames such as the 15-minute chart reveals a potential correction to the hourly trend, showing some buying of the US dollar and a rise in the Australian dollar. This suggests a possible short-term reversal or pullback in the ongoing trends.

13:01

Traders need to reconcile differences between time frames, with the hourly chart serving as a benchmark. While some currencies continue trending, others like the British pound appear overbought, signaling a potential reversal and highlighting the importance of multiple time frame analysis.

13:36

Faster time frames may offer counter-trend trading opportunities, though these come with risk considerations. The viability of such trades depends on individual judgment rather than a definitive rule, emphasizing the nuanced decision-making required in trading.

14:11

Counter trend trades and London session insights

14:11

The speaker discusses risk management and the importance of understanding trading ranges and session timings, especially focusing on the London session and the London fix. They share a recent experience where the pound did not behave as expected in the morning but provided a good trading opportunity during the London fix, particularly with pound-New Zealand dollar and CAD/JPY trades. Screenshots and explanations of these trades are mentioned.

15:20

The speaker transitions to a live trading setup, greeting viewers and preparing to analyze the New Zealand dollar on NinjaTrader. They adjust the screen for clarity and note an audio issue with their headset but proceed to focus on a developing market move.

15:52

FXCM trading account rules and performance

15:52

The speaker introduces a small FXCM trading account used for a fun, simple trading experiment throughout the year. The account started with a few hundred dollars and has grown to around $905. The trading rules are straightforward: a maximum of four micro lots are traded at any time, roughly equating to 5:1 leverage, with each trade having a stop loss. There is no scaling in or out of positions, just simple single micro lot trades. The focus of this project is not on the money made but on accumulating pips. The speaker also mentions recent trades involving the Australian dollar, Canadian dollar, and New Zealand dollar.

17:36

The speaker reviews a recent trade on the Canadian dollar, highlighting a sharp price drop observed on a 30-minute chart from the previous day. They explain their preference for trading reversals, always watching for price action at market tops and bottoms as key entry points.

18:08

Reversal trading examples and volume triggers

18:08

The speaker discusses analyzing the CSI (Commodity Selection Index) on a 30-minute chart to identify trading signals such as volatility triggers, congestion, or full reversals. They explain focusing on longer time frames like 15, 30 minutes, or an hour rather than very short intervals. An example trade involving the Australian dollar/New Zealand dollar is highlighted, where a two-bar reversal pattern at the bottom, supported by preceding high volume, indicated a potential market reversal despite initial downward movement.

19:41

The speaker elaborates on the challenges of trading reversals, emphasizing that reversals do not happen instantly but involve a buffering period. At the time, the dollar was very overbought according to the CSI, suggesting an inevitable break. Traders must accept wider stop losses to accommodate this buffering phase. The payoff comes from capturing the subsequent price movement after the reversal confirms.

20:43

The trade discussed was held for around five to six hours, yielding approximately 40-50 pips as the market moved from the reversal into a congestion phase. Entry candles showed classic weakness signs, such as rallies failing and doji formations, despite lacking volume confirmation. The speaker monitors trend indicators and volatility indexes on hourly or 30-minute charts. They also mention progress on developing additional trading indicators for TradingView.

22:09

Development of TradingView indicators underway

22:09

The speaker discusses upcoming features for Pine Script, including the currency matrix, currency array, currency heat map, VPOC, and support and resistance indicators. These tools will be available soon and are being actively developed and refined. Additionally, they plan to port developments from TradeStation and other platforms to this one, aiming to integrate and improve across multiple platforms. The speaker mentions the ease of linking accounts on TradingView and their intention to share beta versions once ready.

23:07

The current account balance on FXCMS is noted as $905, with a goal to increase it to $1,000. The speaker reflects on the perception of making $100 in a year, explaining that while it may seem small or laughable, the program’s aim is to teach consistent, realistic financial growth over time.

23:33

Trading for consistency over profit

23:33

The speaker emphasizes that when starting trading, the goal is not immediate profit but developing consistency and regularly making pips. They advise against judging performance on a single day due to natural fluctuations and instead recommend evaluating results over a month. This approach helps traders learn about pip value and consistent trading, which is foundational to the funded forex program.

24:31

The funded forex program uses conservative risk and money management rules similar to those applied in the speaker’s own trading account, focusing on consistent, low-risk trading. The evaluation stage teaches traders to maintain consistency in pip gains, proving their ability to trade reliably. Once achieved, traders can scale up to larger accounts and positions. The speaker notes the program’s popularity and its effectiveness in building disciplined trading habits.

26:05

NZD and Euro NZD price action analysis

26:05

The speaker analyzes market movements around New Zealand and Europe, noting a falling volume pattern as the market moves into the London session. A price waterfall pattern is developing, characterized by high volume sell-offs followed by weak attempts to rise. The price is expected to move quickly through low volume nodes but will encounter significant support levels with heavy volume, indicating potential congestion ahead.

26:57

The analysis continues with a focus on the Euro and New Zealand currency pairs. The Euro shows a recent upward push on the 15-minute chart despite an overall falling trend, while New Zealand has moved sideways on the hourly chart and declined on the 15-minute chart. This behavior has created a favorable trading opportunity. The speaker highlights the resistance level near the R3 pivot point on the hourly chart, which aligns with previous observations and sets the context for further discussion.

28:15

Support and resistance importance with Camarilla

28:15

The speaker introduces the Camarilla indicator, emphasizing its reliance on price action and volume, as well as three additional elements: candle patterns, time, and support and resistance. The importance of identifying support and resistance zones is highlighted, as these are key areas on a chart where price is likely to pause, congest, or possibly reverse.

28:56

The discussion continues on the use of price-based support and resistance in the Camarilla indicator, along with specialist indicators developed for various trading platforms. These indicators calculate key levels based on the Camarilla protocol, refreshing daily for time frames below the hourly chart, while hourly to daily chart levels remain constant throughout the week. These levels serve as critical reference points for traders.

29:34

The speaker illustrates the significance of the R3 level on the chart, noting how price repeatedly reaches and is rejected at this zone. This repeated rejection indicates the R3 level is a strong area of resistance, important not just for the current day but for the entire week. The behavior around this level provides valuable insight into market dynamics.

30:14

Using the Euro/New Zealand Dollar three-minute chart, the speaker describes a recent price movement characterized by a rise, followed by congestion, and then a decline. The discussion notes the influx of volume during the London trading session, highlighting how volume and price action interplay in this context.

30:49

Volume point of control and breakout dynamics

30:49

The volume of trades varies depending on the trading session, with lower volumes typically seen in the Asia Pacific session and in currency pairs less traded during that time. The Euro/New Zealand pair attracts local traders due to the New Zealand component. The chart shows a primary downward trend followed by a period of congestion, reflecting that price movements rarely occur in a straight line.

31:24

The congestion occurs around the volume point of control (VPOC), which acts as a fulcrum on the chart and provides volume-based support and resistance. This area is characterized by indecision and consolidation, where the market participants transact within a narrow price range, creating a zone of balance and no clear directional movement.

32:00

As traders continue to transact in this consolidation phase, the volume accumulates over time, causing the volume profile to widen and shift left on the chart. The longer the price remains in this phase, the more pronounced this effect becomes, indicating sustained market indecision and accumulation.

32:37

Upon a breakout, which in this case happens shortly after the London open, there is usually strong momentum behind the move. This breakout aligns with Wyckoff’s second law, which suggests that after a period of consolidation, price movement can become powerful and directional. The next consideration is determining the potential target or direction of this breakout.

33:11

Multiple timeframes and momentum assessment

33:11

The discussion explains how support and resistance levels, indicated by solid and hatched lines on the chart, help predict price movements. A recent price increase is supported by high volume and buying signals seen in candle wicks, suggesting momentum behind the move upward.

33:43

The presenter analyzes candle patterns that indicate buying interest before a breakout. Despite concerns about a potential fake-out due to widespread candles, the price continues rising, supported by momentum and volume, reinforcing the bullish trend.

34:14

The price movement coincides with the London market open, a time known for increased activity. The speaker emphasizes considering this context and highlights the importance of using multiple time frames, noting a pause at the S1 support level and a congestion phase on the 10-minute chart.

34:50

Price tends to pause near congestion areas, which is expected. The key focus is on the hourly chart, where the R3 resistance level is critical. Traders often anticipate price reactions at this level, making it a vital benchmark for assessing trade progress and potential reversals.

35:26

R3 level as key resistance in trading decisions

35:26

The speaker explains how the R3 indicator signals potential long or short trades and emphasizes paying attention to specific price levels. They describe using the Renko chart in conjunction with volume point of control to identify entries, highlighting a move that suggests a possible full reversal despite the Euro still moving lower on the hourly chart. The discussion then shifts to the importance of market sessions and timing trades according to the market’s internal rhythm, recommending planning trading times around key volume surges to create structure in one’s trading day.

37:36

The speaker talks about setting a personalized trading schedule to optimize screen time and maintain discipline. They introduce the S3 level and refer to the ‘cable’ (GBP/USD) chart from the previous day, preparing to demonstrate technical analysis using an hourly chart and visual aids for clarity.

38:15

British Pound S3 support and trade outcomes

38:15

The speaker discusses a trading setup involving the British pound against the US dollar, aiming to go long. They describe identifying a promising trade setup in a specific area and preparing to buy the British pound based on business fundamentals and chart patterns.

38:49

On the hourly chart, the speaker notes the significance of the S3 support level, observing how the price failed and bounced multiple times around this level. The trade eventually resulted in a stop out when the price moved against the position, highlighting the importance of S3 in trade management.

39:37

The British pound eventually reversed sharply off the S3 level, offering a strong short trade opportunity. This move was accompanied by rising volume and market weakness before a bullish reversal occurred near the London fix, testing congestion areas and the S3 level again.

40:16

The speaker shifts focus to the Canadian dollar versus the Japanese yen, noting the importance of the S3 level once again. The Canadian dollar was under selling pressure across pairs, and the S3 level acted as a key point for potential trade setups and price action observations.

40:54

The yen was being bought strongly, driving yen pairs lower and causing the Canadian dollar to sell off. The price reached the S3 level, moved sideways, then dropped, triggering a volatility candle. This highlights market dynamics and the use of volatility signals in trading decisions.

41:34

Volatility indicator and managing momentum spikes

41:34

The speaker discusses anticipating market movement after a price breaks through a level, referencing the S4 level around 81.12. They introduce a volatility indicator marked by purple dots, which activates when price momentum exceeds the average true range, initially triggering on faster time frames. The Renko chart, which focuses solely on price action, helps absorb short-term spikes but may not reflect volatility triggers seen on slower time frames. A volatility trigger on a slower time frame often results in a price retracement or reversal. The speaker observed such a reversal and explains that the real-time trigger signals when to exit a trade, emphasizing the importance of having an indicator to avoid significant losses and confidence damage.

43:54

The speaker highlights the common trader mistake of entering a trade during a building momentum phase without recognizing volatility triggers, which often leads to getting caught on the wrong side of the market. They mention using individual lines of the CSI indicator for additional confirmation. An example is given involving the S3 level from the previous day and the current price action on the Euro/New Zealand pair, noting that price has paused and reversed near a strong resistance region without breaking through to R3.

44:55

Real-time Euro NZD resistance and CSI tracking

44:55

The segment discusses the importance of a key support and resistance level derived from the R3 camarilla pivot, which will be significant for the rest of the week. It highlights the use of a matrix tool to track the performance of currency pairs, not only individually but also in relation to other pairs, such as euro pairs. The speaker mentions holding a long-term short position in the Euro/Aussie pair, which remains active because it generates positive rollover income from the broker. This rollover payment provides an additional reason to maintain longer-term positions alongside intraday trading strategies during the London and U.S. sessions.

46:33

Long-term positions and rollover benefits

46:33

The discussion focuses on the Euro Aussie currency pair, highlighting its ongoing consolidation phase visible on daily and weekly charts, making it a textbook example. The Euro is still weak and selling off on the hourly timeframe, with a brief reversal on the 15-minute chart that quickly failed. The primary trend seems to be reestablishing itself. The speaker also explains the use of the ‘matrix’ tool for tracking buying and selling strength, noting that buying in the Euro against the New Zealand dollar has ended. The matrix helps traders interpret indicator values to determine market moves’ strength, distinguishing between strong, average, or weak signals.

48:13

Currency strength indices and trend evaluation

48:13

The speaker discusses the hourly chart trends, noting current values such as the Aussie dollar at +29 and the Canadian dollar at -26, emphasizing that these numbers are low compared to serious trends that reach values of 120 or more. Values below 30 indicate certain trading conditions that affect how one should approach trading these currency pairs.

49:25

The speaker invites questions from the audience and mentions passing over to David to answer queries, particularly about micro lots. They encourage participants to use the chat box for questions.

49:18

The original speaker apologizes for missing a question and hands over to David, announcing their departure due to a phone call but mentions returning later. David is tasked with addressing questions in the meantime.

49:45

David explains micro lots in trading: a micro lot equals 10 cents per pip, a mini lot is $1 per pip, and a full lot is about $10 per pip. He addresses a question about how account size affects trading and leverage, introducing the concept of lot sizes and their impact.

50:21

David elaborates on leverage, noting that some brokers offer extremely high leverage ratios (up to 400:1), which he considers risky. Many companies are reducing leverage caps to 50:1 or even 10:1. He mentions their funded program uses a maximum leverage of 5:1, which they recommend for safer trading.

50:55

David emphasizes that leverage is a double-edged sword: while it can amplify profits, it equally magnifies losses. He advises traders to choose leverage levels that fit their account size and risk tolerance to trade conservatively.

51:28

David concludes by explaining that trading four micro lots on an account with under $1,000 equates to a maximum exposure of $4,000 or 4:1 leverage. Experienced full-time traders typically operate around these leverage levels to maintain responsible risk management.

52:00

Leverage explained for micro, mini, and full lots

52:00

The segment explains the concept of trading with no leverage, highlighting that it requires substantial capital, such as having $100,000 to trade a full lot size without leverage. Leverage is described as a double-edged sword that traders must fully understand. The speaker then introduces the currency array, comparing it to the trend monitor and trend dots, and distinguishes it from the currency matrix. The currency array provides a longer-term view of trend changes and indicates currency strength and weakness, such as the Aussie being the weakest currently. It also signals overbought and oversold conditions and provides ongoing trend clues.

53:28

Currency array and matrix for trading signals

53:28

The speaker discusses how to select currency pairs for analysis, focusing on the Aussie yen approaching an overbought condition in short timeframes and the euro Aussie nearing a potential oversold reversal. They emphasize paying attention to tops and bottoms on different timeframes and the currency heat map, highlighting the importance of identifying the most bullish and bearish currencies to anticipate reversal opportunities early.

54:28

The discussion shifts to specific currency pairs involving the Aussie dollar, such as the Aussie New Zealand dollar and the Aussie CAD, noting their similar risk profiles as commodity currencies. The close economic and trading relationships between Australia and New Zealand are highlighted, along with how these pairs often move in relation to each other due to shared economic factors like interest rates.

55:26

Attention is drawn to the ranking of currencies across different timeframes, from one minute to monthly. The speaker explains that changes in sentiment across these timeframes are weighted differently, with slower timeframes carrying more significance. This weighting affects how currency rankings move up and down the ladder, providing traders with insights into potential market shifts.

56:22

The speaker elaborates that slower timeframe rankings shift gradually, typically moving one to three slots over days. The ranking system integrates timeframe sentiment to reflect these changes accurately. This approach offers a comprehensive and compact visual overview of currency behavior across multiple timeframes, enabling traders to monitor trends without analyzing numerous charts.

57:14

The dynamic nature of the ranking cells is described, with colors indicating bullish or bearish trends that change frequently. This single workspace consolidates information from around 250 cells, simplifying the monitoring process. The speaker points out how commodity currencies like the CAD, Aussie, and New Zealand dollar often move together, but divergences—such as the CAD breaking away due to oil influence—can signal trading opportunities.

57:43

The final segment highlights the importance of observing the interactions among commodity currencies. When one currency leads movements, it may predict subsequent moves in the others, offering potential trading signals. The speaker advises traders to watch for such leading behaviors, especially in risk currencies, to capitalize on emerging trends.

58:34

Commodity currencies and risk profiles

58:34

The segment discusses the concept of the CSI from a risk perspective, analyzing movements in the Swiss franc, US dollar, and Japanese yen to provide a comprehensive view of market risk. It then shifts focus to the US equity markets, specifically the YM, NQ, and ES on a five-minute chart, noting that the dollar is currently trading sideways.

59:02

US equities market overview and recent trends

59:02

The market movement is somewhat choppy and sideways, with the volume point of control (V-POC) consistent across three timeframes. Equity markets currently show minor perceived risk. Yesterday’s session saw a mixed recovery where the YM (Dow Jones futures) rebounded, the NQ (Nasdaq futures) did not, and the ES (S&P 500 futures) partially recovered but mostly remained flat or negative. This small risk-on sentiment was mainly reflected in the Dow Jones. The session concludes with a mention of available resources on quantumtrading.com and other trading platforms.

01:00:02

Quantum Trading platforms and indicator availability

01:00:02

The speaker discusses the availability of TradeStation software supporting both TradeStation Securities with its full range of trading indicators, including quantum indicators and the powerful radar screen capable of running up to a thousand cells. Although the release was delayed due to ongoing work, it is expected to be available next week. They are also working on porting all other indicators to TradingView, and users who already have TradingView indicators with the full package will receive these new indicators free of charge. However, once released, the price of the package, currently around 600, will increase to approximately 894 to align with the MT45 full package.

01:01:00

It is recommended to invest in the full package now to receive all TradingView indicators for free before the price increase. The package can be purchased either on the EPP or outright. The speaker also directs listeners to anacooling.com for books, including Kindle versions, and provides links to the complete forex trading program as well as the funded forex account.

01:01:26

Complete Forex Trading Program and funded accounts

01:01:26

The video introduces the comprehensive Quantum Education forex trading program, which supports traders of all experience levels. Many students join after reading Anna’s foundational books and progress to the program for advanced learning. The program now includes a funded forex trading option, allowing traders who achieve consistency in smaller accounts to apply their skills with larger funded accounts and earn profit kickbacks.

01:02:19

Traders start with evaluation accounts of $5,000, $10,000, or $15,000 to demonstrate consistent profitability. Upon passing, their capital is multiplied by four, increasing available funds to $60,000 and then doubling progressively up to $2 million. Although the account sizes grow, traders continue using the same trading methods they proved consistent with, benefiting from profit paybacks while managing larger sums.

01:03:20

The funded accounts use the program’s money, so there is no financial risk to the trader. Traders can continue managing their own accounts while trading the funded ones live. A one-time fee grants access to these accounts, and proper risk and money management protocols protect the program’s capital throughout the process.

01:03:47

Risk management and funded trading program details

01:03:47

The speaker concludes the session by expressing hope that the audience found it useful and thanks them for attending. They then shift focus to the financial markets, noting a spike in the Australian dollar due to a drop in the US dollar, which triggered volatility signals on a 15-minute chart. Meanwhile, the Canadian dollar remains relatively stable.

01:04:17

Closing remarks and session availability

01:04:17

The session concludes with thanks to the audience and a reminder about an upcoming session at 3 PM US time covering US markets, indices, and commodities. Viewers are encouraged to enjoy the rest of their trading day and week, with assurance that weekly webinar schedules will be provided. Additionally, the current meeting will be available for replay on the YouTube channel later today.

By Anna Coulling – creator of volume price analysis