The importance of the R4 level on the Camarilla levels indicator for NinjaTrader

The importance of the R4 level on the Camarilla levels indicator for NinjaTrader

The importance of the R4 level on the camarilla levels indicator and an example from our live US futures session.

00:12

Forex market end-of-month flows and cable trends

00:12

The speaker discusses the unique dynamics of end-of-month flows in the forex market, focusing on the ‘cable’ currency pair (GBP/USD). They highlight that cable is an excellent currency to trade, often producing strong trends and significant price moves, sometimes exceeding 80 to 100 pips. The commentary also references recent market volatility around Brexit events, noting that cable has delivered notable trading opportunities. Additionally, the speaker mentions the importance of timing trades around the London session close, which occurs at 4 PM local time.

01:20

Volatility candles and trend dot indicator explained

01:20

The segment explains how to interpret price and volume data on a chart, starting with an example where the time indicated corresponds to earlier hours. It discusses the appearance of a wide volatility candle following a break from the volume point of control, which signals market support. The speaker highlights a significant candle with heavy upper wick, indicating potential weakness and a price pullback. Attention is drawn to a small trend dot indicator, praised for its real-time responsiveness and effectiveness in identifying market trends and aiding entry decisions, especially on the Renko chart. The segment concludes by noting upward momentum supported by volume and a large candle around the London trading hour on the hourly chart, reflecting market volatility during this period.

03:15

Volatility trigger and London fix market activity

03:15

The segment explains the concept of a wide-ranging candle triggering a volatility indicator when its spread exceeds the average true range for that timeframe. Examples of triggered volatility events are highlighted, showing that such candles can indicate significant price movement but also potential volatility. The discussion then shifts to trend analysis, noting that trend dots remain beneath the price action despite a minor pullback. The pullback is examined using a faster 10-minute chart, emphasizing the importance of incorporating support and resistance levels, which are key components of volume price analysis (VPA) and classical technical analysis.

04:21

Support and resistance with Camarilla levels

04:21

The video explains how support and resistance levels are determined using specialized indicators. These indicators identify key price areas such as accumulation, distribution, and potential price objectives (prime AR levels). The fourth level, AR four, is particularly important, with additional levels five and six also tracked. When the price reaches these levels, it often pauses, indicating their significance. The indicator refreshes these levels every 24 hours across all timeframes except the hourly chart. Examples on hourly and other charts demonstrate how price pausing aligns with these indicator levels.

06:00

Using R4 level for trade exits and stop losses

06:00

The speaker explains the significance of the R4 level on a 10-minute chart, highlighting that hitting this level doesn’t guarantee a reversal but marks an important resistance point. Traders using Camarilla levels watch for price to push against and break through R4, which can signal a legitimate breakout if supported by volume. Repeated tests and retests of R4 are common. The level can serve multiple purposes: as a potential exit point if price stalls there, as a stop loss placement if price breaks through, or as a strategic marker depending on trade entry. The market behavior is likened to an endlessly rotating carousel, emphasizing its continuous and cyclical nature.

07:42

Market as a rotating carousel with varied speeds

07:42

The speaker explains the concept of a price carousel that moves at varying speeds throughout the trading day, sometimes very fast and other times slow, but never stopping. They emphasize the importance of constantly monitoring this movement by jumping on and off as needed. To determine where the market is within this continuous movement, traders look at price action and key levels, then validate these moves using volume indicators. New traders are encouraged to watch charts closely, paying attention to price behavior near important levels.

08:52

The discussion shifts to an indicator called ‘r4’ and its behavior on different timeframes. On shorter timeframes like 10 minutes, levels update frequently, while on hourly or daily charts, levels refresh on a weekly basis, providing a broader perspective for trading. The speaker highlights how price movements, especially those with high volume such as volatility candles, interact with these levels. They note that some levels persist throughout the week without refreshing until the new session begins, illustrating the importance of understanding these time-based level refreshes when analyzing price action.

10:00

Resistance points and price action analysis

10:00

The speaker analyzes price action around a key resistance level that price has tested multiple times, including during the London fix when market momentum is high. They identify the next logical stopping point at 2923.56, noting it coincides with a natural resistance area confirmed by previous price reversals. The discussion emphasizes the importance of recognizing these resistance points for potential reversal trades.

11:10

The market’s behavior depends on the trading session and time of day, as these influence participation and price movement speed. Traders must accept missed trades and focus on current price levels and what is likely to happen next. The speaker highlights the importance of finding potential entry points without chasing price impulsively, advocating for a strategic approach based on market context rather than reacting out of fear of missing out.

12:21

The recommended strategy is to wait for a congestion or pause phase after a strong price move before entering a trade, rather than jumping in immediately. The length of this pause correlates with the move’s strength. The speaker references a recent example involving a significant move in CAD/JPY, discussed in their online analysis, illustrating how the market needs time to recalibrate before deciding to continue or reverse the trend.

13:29

Using the Renko chart for GBP/USD (cable), the speaker examines the current move’s extent and highlights the necessity for the market to pause and reassess after strong price action. This pause allows traders to determine whether the trend will continue or reverse, reinforcing the importance of patience and observation in trading decisions.

14:03

Trend continuation, pullbacks, and volume analysis

14:03

The speaker discusses a period of consolidation characterized by sideways movement, emphasizing the importance of the R4 level as a significant resistance point for a potential breakout. Confidence in taking a trade beyond this point depends on stop-loss placement below R4. Additional technical indicators, such as the CSI, help differentiate between a minor pullback and a reversal, aiding traders in confirming the continuation of the primary trend. The analysis involves understanding volume and price action to identify whether observed secondary trends are merely pullbacks or indicate a trend reversal.

15:39

Using the hourly chart, the speaker notes a pause and congestion at a key level near R4, suggesting traders should wait for this congestion to resolve before making decisions. The volume point of control (VPOC) at 23:22 is highlighted as a dynamic indicator that shifts with price movements and acts as a fulcrum for trend direction. A move of the VPOC higher would signal strength and support the continuation of the primary uptrend, emphasizing patience while monitoring this key level.

16:50

The speaker explains that the volume point of control is based on volume, price, and time, making it a comprehensive indicator of market activity. An upward movement of the VPOC would increase confidence in a continued rise in price. The short-term target is identified using price action combined with volume and support/resistance levels, particularly through the lens of Camarilla pivot points, which help in defining potential price targets and market direction.

By Anna Coulling – creator of volume price analysis