The psychology of trading – do you have the patience?

The psychology of trading – do you have the patience?

The tactic of trading reversals takes patience, and something you may not have in abundance. In this example we take a look at the EUR/CAD with the euro heavily overbought and the Canadian dollar equally heavily oversold on the currency strength indicator for NinjaTrader.

00:10

Switching focus to Euro CAD pair

00:10

The speaker switches focus to the Euro CAD currency pair for a specific reason related to previous analysis using multiple CSIs. They compare Euro CAD with Euro Ozzie and mention that similar to the Pound Ozzie, there is congestion and falling trends observed in the Pound Ozzie pair.

00:45

Euro rollover and market selling pressure

00:45

The discussion focuses on the Euro rollover, indicating selling pressure on the Euro in the market. This selling is also impacting the Euro/Australian Dollar pair, showing a downward movement. The speaker questions which currency pair to monitor, noting that pairs involving the Euro often move in the same direction, similar to the dynamics seen with the British Pound and Australian Dollar.

01:10

Canadian dollar strength emerging

01:10

The Canadian dollar is starting to strengthen, as seen on the five- and ten-minute charts, although the 15-minute timeframe still shows it selling off alongside other commodity currencies like the Australian and New Zealand dollars. For scalpers, the upward move has already begun quickly, presenting a reversal opportunity that didn’t require much waiting. However, the price may pause or consolidate, so traders need to continuously monitor the charts to decide on their next moves. The discussion also notes similar volatility patterns on related currency pairs within the ten-minute timeframe.

02:28

Volume and trend analysis on multiple timeframes

02:28

The segment explains how velocity triggers indicate market weakness, exemplified by a large wick and volume patterns in the London market. The trend monitor has not yet shifted to confirm a longer-term trend, which is expected as it is still early. The speaker highlights the usefulness of the 15-second timeframe for rapid market insights and discusses integrating volume price analysis (VPA) and other indicators like volume point control for trading decisions.

03:24

This part describes the transition on the one-minute chart into a bearish phase, confirmed by the trend monitor turning red. The speaker illustrates a two-bar reversal pattern where the market rallies, hits a resistance level, and then pulls back. They explain the relative ease of visualizing this with two candles compared to more complex multi-candle patterns. The importance of sentiment analysis is emphasized, particularly when trading commodity currencies, which are generally considered risk assets, and mentions monitoring the VIX as part of sentiment evaluation.

04:22

Impact of VIX and oil on currency markets

04:22

The segment discusses the current market sentiment, noting a slight increase in risk as indicated by the sliding VIX. Attention is given to oil prices, which are influencing the euro CAD currency pair. Oil is attempting to recover after a recent decline, supported by technical levels including accumulation and distribution phases. A strong support platform near $40 a barrel has held through recent tests, with minor resistance just below that level.

05:20

Oil prices have been bullish since a significant volatility event caused prices to crash below zero, followed by a strong reversal and trend development supported by the T-line bond indicator. The current price action shows some bullish sentiment with minor resistance around $37.25 per barrel. Volume is decreasing, indicating that if volume picks up under the resistance level, the price may break through without requiring a large volume spike.

06:15

The market is currently experiencing congestion and indecision around the volume point of control, signaling a need for patience. Traders are advised to watch volume and price action closely to determine if a stronger trend will develop. The emphasis is on waiting for clear signals before making further moves.

06:41

Currency indices showing congestion

06:41

The speaker reviews various currency indices including the Euro, Canadian dollar, yen, dollar, and pound using NinjaTrader charts. They note recent selling pressure on the pound which has now entered a congestion phase. Similarly, dollar and yen buying momentum is pausing, and the Euro index is also in a pause, indicating overall market congestion without a clear strong trend developing at this time.

07:36

The analysis continues with a focus on whether the current congestion in currency indices will break into a stronger trend or persist. The speaker shifts to isolated charts of the Euro and Canadian dollar (EuroCAD), discussing conditions needed for a short position: selling pressure on the Euro and buying pressure on the Canadian dollar. The segment emphasizes watching these dynamics to determine potential trade setups.

08:22

Observing Euro CAD price and volume dynamics

08:22

The speaker discusses monitoring currency pairs with CAD as either the counter or primary currency, observing their movements up and down the chart. They highlight the use of a bookmark function on indicators to track specific pairs in chosen colors. Attention is given to volume patterns and market indecision, with a focus on potential breakdowns through low volume regions that could signal quicker price moves, and warnings about volume building as prices move lower which may limit downward movement.

10:04

Multiple timeframes provide valuable insights by revealing different aspects of market behavior that aid decision-making. The speaker notes rising volume and potential price support on the 10-minute chart. They emphasize the advantage of using several charts simultaneously to gather comprehensive information. The VIX is observed fluctuating in a state of indecision on faster timeframes, reflecting uncertainty in the market.

10:59

Analysis shifts to equity indices on the Globex electronic markets, including the Dow (YM), Nasdaq (NQ), and S&P 500 (ES). A recent rally is noted but characterized by falling volume, which suggests the rally may lack strong conviction and might not sustain. The speaker explains the importance of volume in confirming price action and relates these market dynamics to risk-on and risk-off sentiment, which also influence currency markets. Understanding these interconnections provides a clearer perspective on trading complex markets.

12:30

The session wraps up after about an hour, with no questions pending. The speaker provides an overview of the complete forex trading program, describing it as a comprehensive course covering everything needed to trade the forex market confidently from start to finish, including all necessary components and tools.

13:04

Overview of complete Forex trading program and resources

13:04

The program comprehensively covers trading indicators, beginning with the psychology of trading, which is essential to understand one’s personality, strengths, and weaknesses for success in trading. It includes extensive materials such as eight PDF downloads for self-assessment and a detailed fundamentals module explaining inter-market and cross-market relationships. The technical analysis section covers volume price analysis (VPA), primary and secondary trend identification, and mechanics of currency trading. The program also offers hundreds of hours of video content, including how to use indicators, various trading strategies like reversal, trend, breakout, and scaling, position sizing, and a large webinar library totaling over 200 hours.

14:59

Students can join the VPA traders chat room, a supportive community with experienced traders who assist newcomers. The program is available on multiple platforms and soon on TradeStation. All related books are available on Amazon in paperback or Kindle formats. The trading indicators can be accessed at the Quantum Trading website, compatible with several platforms including NinjaTrader 7 and 8, and TradingView, with licenses covering multiple platforms.

15:51

The team is actively expanding platform compatibility, working on TradeStation and MultiCharts, and enhancing TradingView scripts to allow porting of most indicators across platforms. They assure progress is steady and improvements are forthcoming. Contact details for support and inquiries are provided, inviting users to reach out via email for assistance.

16:46

The session concludes with plans to take a walk in the Hampshire Downs and reminders about upcoming sessions, including a futures session later in the week. The speaker thanks viewers, hopes they found the content informative, and looks forward to future meetings.

By Anna Coulling – creator of volume price analysis