Trade commodities with confidence using volume price analysis

Trade commodities with confidence using volume price analysis

Volume price analysis can be applied to all markets and time frames, and in this section from the US trading session we highlight some excellent examples for both oil and gold in the faster time frames.

00:10

Introduction to multiple index futures trading

00:10

The speaker begins by adjusting the chat box and preparing to discuss a VBA example related to trading multiple indices. They mention the YM, NQ, and ES indices and reference trading futures such as the Russell or other index futures.

00:46

Bearish sentiment and support levels analysis

00:46

The segment discusses analyzing multiple indicators simultaneously to gain different perspectives on volume and price action, noting they generally move in the same direction but can diverge. It highlights a developing bearish sentiment on the daily chart, with a strong long-term bullish trend. The NQ daily chart is emphasized, especially regarding a key resistance level that acted as resistance yesterday and is now support. The analysis also considers the impact of recent employment data, noting a gap up opening followed by selling pressure, with identified support levels including a volume point of control and other support platforms, useful for intraday trading on a 5-minute chart.

01:46

Volume price analysis on 5-minute charts

01:46

The speaker analyzes a recent price movement, noting a small rally accompanied by increased volume under a specific candle, indicating buying interest. They emphasize that this price action is unusual compared to expected behavior, as the price closed higher than anticipated. Observing the 5-minute chart, they highlight a rally with falling volume and narrowing spreads, suggesting the strength of the move is questionable. This segment introduces the concept of volume price analysis to determine if a trend reversal from bearish to bullish is genuine or merely a temporary fluctuation.

02:37

Interpreting minor pullbacks vs reversals

02:37

This segment explains the concept of a weak pullback or minor reversal within a secondary trend, which is essential for trading success. The Volume Price Analysis (VPA) methodology helps traders recognize these minor pullbacks, preventing premature exits and allowing them to maximize profits. Many traders mistakenly close positions during minor reversals when the market actually continues in its original direction. The use of a trend monitor, which remains consistently red in this example, reinforces the ongoing trend and advises holding the position, indicating no imminent weakening or reversal.

03:36

Trend monitor and stop-loss strategy

03:36

The speaker explains that the current market condition is characterized by bearish sentiment rather than a steep price decline, suggesting a cautious trading approach with proper stop-loss placement. They discuss adjusting stop-loss levels as price breaks certain points to lock in profits. Additionally, multiple time frame analysis is emphasized, showcasing setups on various charts including 15-second, 2-minute, 5-minute, 10-minute, and 15-minute intervals to better manage trades.

04:35

Using multiple time frames in trading

04:35

The speaker discusses monitoring a support platform that plays a key role in trading, emphasizing the importance of multiple time frame analysis. They observe the 15-second chart moving up to the volume point of control but note limited conclusions can be drawn at this point. There is some buying activity visible, with one candle looking promising, yet overall the market appears weak. The speaker then shifts focus to checking the oil market briefly.

05:05

Oil market volatility and volume signals

05:05

The segment analyzes market activity across multiple timeframes, including 3-minute, 10-minute, 15-minute, 30-minute, and daily charts. It highlights a significant volatility spike on the daily chart, indicating expected market congestion in the current region without a strong directional move. Intraday volume patterns are examined, showing the market’s reaction to high and low volume candles. Early signals of market weakness are identified through increased selling volume, indecision candles, and rising selling pressure, suggesting a falling market trend supported by volume-price analysis.

06:29

Price resistance and volume distribution levels

06:29

The market is identified as structurally weak based on multiple charts and price resistance levels indicated by the accumulation distribution line. Analysis of the 10-minute chart shows significant volume with wicks indicating selling pressure and weakness. The subsequent candles confirm this weakness with narrowing spreads and lower volumes, suggesting the market is unlikely to rise sharply and is more prone to congestion or reversal. This conclusion is supported by similar patterns observed on the 4-minute and 5-minute charts, including long-legged doji candles, high volume with indecision, and volatility candles that indicate expected congestion or reversal.

07:48

The market behavior—congestion and potential reversal—is consistent across various instruments regardless of the asset type, whether index futures, commodities, or stocks. While understanding the specific instrument and its contract size is important for trading, the fundamental principles of volume and price analysis apply universally to identify market conditions.

08:16

Volume price analysis across timeframes

08:16

The speaker explains that the analysis technique can be applied to any chart or timeframe and emphasizes the significance of volume in price movements. A specific example is given where a price drop from $18.20-$18.30 to $17.50-$17.60 per barrel represents a substantial financial move. The discussion then shifts to identifying key areas on the chart, such as volume point of control, where the market tends to pause due to heavy volume concentration. Additionally, price-based levels are introduced, with lines that thicken as levels are tested repeatedly, indicating the strength or weakness of those levels through the accumulation distribution indicator.

09:44

Support and resistance level testing

09:44

The speaker explains the significance of testing levels multiple times in market analysis, indicating strong support or resistance when lines thicken due to repeated tests. A recent resistance level was hit and the market showed a reversal and an attempt to rally, but this rally is occurring on falling volume, which suggests limited strength. The market is expected not to move far under these conditions, and traders are advised to wait for a break away from the volume point of control before considering trading opportunities.

10:43

Volume confirmation of breakout strength

10:43

The speaker explains the importance of volume in confirming genuine market moves away from the volume point of control. They describe how the volume histogram helps identify price levels that act as barriers or support. If the market breaks through a price support level, it is likely to move quickly through areas with low volume nodes, which offer little resistance. This rapid movement through low volume and light support zones is crucial for traders to anticipate market direction and potential price targets.

12:12

The discussion continues on interpreting charts and indicators to predict market movements. Multiple timeframes are used to track the volume point of control, which remains a key reference until the market decisively moves away from this region. This approach helps traders understand where the market is likely headed next.

12:43

Oil price congestion and market fulcrum

12:43

The speaker explains that the oil market is currently stable with no strong bullish or bearish trends, likening it to a seesaw balanced at the volume point of control. Price action resumes only when the balance shifts due to changes in market participants. The discussion then shifts to market indices, noting a recent downward break and emphasizing the application of the same analysis principles across different timeframes. The speaker highlights their preference for examining faster timeframes to anticipate movements in slower ones.

13:45

Index trend analysis and scalping approach

13:45

The speaker explains that their trading strategy, while fast-paced and not suited for everyone, works well for intraday scalping. They describe the current market trend as bearish, with indicators on multiple timeframes confirming this. Despite some pause in the trend, the market remains in a downward movement, supporting a short position. The speaker emphasizes the importance of checking slower timeframe charts, like the daily chart, to identify strong support or resistance levels that could impact intraday decisions.

14:46

Importance of slower timeframe charts

14:46

The speaker explains the importance of using a slower time frame chart because it incorporates the weight of time, making support and resistance levels more significant in technical analysis. They emphasize the value of monitoring multiple time frames when trading and introduce an example by checking the price action on gold, noting its recent congestion.

15:23

Gold market congestion and volatility traps

15:23

The speaker discusses the market’s current bullish trend, noting it is slightly weakening but still positive over the longer term. They analyze a chart showing multiple volatility triggers at different time frames (3, 5, and 10) but not yet at 15. The presence of these volatility traps suggests either a period of congestion or a potential full reversal. For a downside move to develop further, the price must break below a key candle at 1688. Currently, the market is in congestion, trading within a channel defined by support and resistance levels. Confirmation of a breakout from this channel requires volume analysis and monitoring across multiple time frames, especially for short-term trading such as on a three-minute chart.

16:24

Currency indices and ECB impact

16:24

The speaker discusses the importance of using multiple time frames when analyzing currency indices, highlighting that volatility may not always appear on shorter time frames like three minutes but can show up on others. They review various currency indices on five-minute charts, including the yen, dollar, and euro, noting strong euro buying influenced by the ECB. The British Pound is also examined, showing some buying strength on the 15-minute time frame, although it is beginning to roll over. Additionally, there has been selling pressure on the yen. The speaker mentions checking the VIX for market volatility and suggests where to find it if it is not available on the viewer’s platform.

17:31

VIX behavior and month-end market effects

17:31

The speaker discusses the price movements of the yen across different timeframes, noting unusual and weak price action. Despite some selling and buying activity around month-end, these shifts do not fully reflect overall market risk sentiment. The speaker highlights that such divergences often occur at month-end, half-year, and March-end accounting periods due to disciplined Japanese currency repatriation practices.

18:35

Japanese currency repatriation effects

18:35

The speaker discusses unusual currency risk behavior around the month end, noting that it is typically out of balance compared to normal expectations. They then shift focus back to indices, specifically observing a slight bounce developing in the NQ (Nasdaq) on a two-minute timeframe, and prepare to pass the discussion back to Anna.

By Anna Coulling – creator of volume price analysis