Price & volume technical analysis lessons during the London forex session

Price & volume technical analysis lessons during the London forex session

00:01

Introduction and disclaimer

00:01

The webinar begins with a welcome message for the London Forex session attendees. The presenter thanks the audience for their patience and reminds them of the trading disclaimer, emphasizing the risks involved in trading and advising not to use money that cannot be afforded to lose. Due to a delayed start, the presenter plans to quickly go through the next few slides.

00:29

Forex market and volume price analysis

00:29

The discussion focuses on analyzing forex market charts using volume price analysis, which combines price action with volume to determine the authenticity of chart movements. Emphasis is placed on considering fundamental news and data releases, as well as the influence of related markets. The speaker highlights that many traders, including beginners and some experienced ones, often overlook the important relationships between individual currencies, currency pairs, and other markets, especially through market sentiment or direct correlations.

01:31

Inter-market relationships and currency pairs

01:31

The speaker explains how the value of a currency is often linked to commodities produced by its country, using the Canadian dollar’s relationship with the oil market as an example. Understanding these inter-market connections can clarify the interpretation of financial charts. The speaker also mentions that he and David have developed tools or methods for their own use to better analyze these relationships.

02:04

Developed trading tools and heat map

02:04

The speaker discusses quantum trading tools designed to analyze the forex market by deconstructing currency pairs. Unlike other markets, forex involves trading one currency against another, which requires unique tools to understand flow trends. The tools help identify where capital is moving into individual currencies and reassemble that data to determine strong upward or downward trends. These indicators operate across multiple time frames—from one minute to monthly charts—covering 28 currency pairs. This multi-timeframe, multi-pair analysis saves time and provides insights on market sentiment and movements, potentially reflecting trends in related markets as well.

03:44

Current market conditions and oversold currencies

03:44

The speaker analyzes the pound and the pound sterling index (CSI), noting heavy selling pressure on the Australian and New Zealand dollars, which are both very oversold on the hourly chart. These currencies are particularly oversold against the euro and the Swiss franc, which have seen strong buying since the previous day. This situation suggests a potential reversal, as markets tend to revert from oversold or overbought conditions over time.

04:54

Trading strategies: oscillations and congestion

04:54

The speaker discusses trading strategies in various market time frames, emphasizing the decision traders must make between waiting for a wave to reach a peak or trough before trading the reversal, or trading during oscillations when price moves into congestion. They explain that markets rarely move in straight lines and often pause or congest for various reasons before breaking back in the direction of the primary trend. Using the Euro and Aussie as examples, the speaker highlights the complexity of these decisions and stresses the importance of traders becoming comfortable with their preferred chart setups and the number of confirming signals they require before making trades.

06:10

Trader behavior and risk tolerance

06:10

The speaker explains that traders exhibit a range of behaviors from aggressive to cautious, influenced by their individual trading persona. Aggressive traders might act on one or two signals and take on more risk, while others prefer additional confirmation before entering a trade. There is no right or wrong approach; it depends on the trader’s personality and risk tolerance.

07:21

Dollar Swiss hourly chart analysis and signals

07:21

The discussion begins with an example of the Dollar Swiss pair on an hourly chart, highlighting how the dollar, a safe haven currency, tends to be sold when stock indices rise and bought during market fear or geopolitical events. The speaker emphasizes the importance of watching price action near session crossovers on slower time frames like hourly charts, as significant moves often occur when a new trading session begins, such as London or New York sessions.

09:09

The analysis focuses on using specific indicators related to individual currency pairs, such as the CSI indicator, while filtering out unrelated currencies. Attention is drawn to the Dollar Swiss pair approaching a resistance level coinciding with a Camarilla resistance (R2) line. Historical data shows this resistance caused reversals multiple times during the past week, especially during the European session, suggesting potential price pauses or reversals at this level.

10:47

A significant move to the downside triggered a volatility indicator, marked by a purple dot, indicating price action moved outside the average true range. This was followed by a bearish engulfing candle and a large shooting star pattern at resistance, signaling potential reversal. Traders might choose to enter aggressively on this signal or wait for further confirmation. The price subsequently moved to the volume point of control, a key zone where price tends to consolidate or find support/resistance.

12:25

Volume point of control and market congestion

12:25

The market is currently in a price agreement or congestion phase, characterized by oscillations around a key volume point of control which acts as the market’s fulcrum. This congestion can be wide, volatile, or simply a period without strong directional bias, evidenced by repeated attempts to break away and then revert to this level. The interaction of currency pairs during this phase often shows intertwined movements that appear to diverge but then converge again, making trading challenging especially on slower time frames. While this congestion has persisted on the hourly chart since the 15th, faster time frames may still present trading opportunities despite the overall sideways price action.

14:00

CSI crosses and session timing importance

14:00

The segment discusses the price action at the volume point of control (VPOC) where the market coincided with a cross on two lines, potentially signaling a reversal. It explains that while the initial move may have been missed, the crossover can set up divergence, which led to a significant waterfall move on the Dollar Swiss hourly chart. The importance of monitoring session timing, such as the transition from the London session to the New York session, is highlighted to understand price behavior within the 24-hour trading cycle.

15:16

This part emphasizes the significance of the 24-hour trading cycle and its sessions, including Globex and the New York cash open. It stresses that while markets are accessible around the clock, each session has distinct patterns and focuses that impact currency pairs differently. Understanding these session dynamics is crucial for effective trading.

15:57

Trading sessions and structuring trading life

15:57

The speaker explains that forex trading operates within a 24-hour cycle with defined start and end times. This structure makes it easier for traders to organize their daily routines, allowing them to combine trading with other activities. Since not everyone can focus on the screen for many hours, traders can strategically engage during specific market sessions by choosing currencies and timing their trades accordingly.

16:33

Euro dollar key levels and news impact

16:33

The speaker discusses how to monitor currency pairs by identifying likely movement times, especially around new session openings and crossover points. They highlight the importance of watching charts for pauses in price action at these key times. Using the euro-dollar pair as an example, they describe a significant price level (R4) that coincided with market events such as the New York open and a speech by Christine Lagarde, illustrating how external events can influence market rhythms. Traders are encouraged to understand and adapt to these rhythms to improve their trading effectiveness.

17:41

Current trades and price action review

17:41

The speaker discusses the Australian pound, noting it is very oversold and refers to a specific trade setup involving a two-bar reversal observed earlier. They mention analyzing multiple time frames including three-minute, ten-minute, and hourly charts, and compare the current price action to a similar setup seen previously with the dollar Swiss pair. The speaker then passes the analysis over to David, who has been monitoring the situation more closely.

 

By Anna Coulling – creator of volume price analysis

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