Trading forex using volume price analysis

Trading forex using volume price analysis

00:00

Introduction and Disclaimer

00:00

The webinar begins with a welcome to the audience and an introduction to the forex market. The presenter displays charts and emphasizes the importance of reviewing the mandatory disclaimer. They highlight that trading involves significant risks for all participants, regardless of their financial status, and advise against using money that one cannot afford to lose.

00:30

Session Structure and Market Overview

00:30

The speaker introduces the topic of recent developments in the broader market, mentioning that this session will provide an overview. They note that a more detailed discussion on indices and stocks will occur later in the day, explaining that the usual webinar on these topics has been split into two parts with a break in between.

00:58

Volume Price Analysis Explained

00:58

The segment introduces the approach of volume price analysis applied primarily to the forex market, explaining how price action and volume interact to determine the authenticity of chart movements. It emphasizes that this method isn’t limited to forex but applies across markets, highlighting the importance of considering fundamental factors like economic releases and the influence of related markets. The discussion notes that price action often reflects both immediate reactions to news and longer-term influences, with interrelated capital markets playing a key role. The speaker points out that traders should pay close attention to the bond market due to its significant impact on price action.

03:02

Forex Market Indicators and Tools

03:02

The speaker introduces volume price analysis, emphasizing the importance of volume, price, candles, candle patterns, and support and resistance levels. They explain that support and resistance can be price-based and are visible on charts. The discussion also mentions proprietary indicators developed specifically for forex trading, which are part of their quantum tools and education program. These indicators can be blended and customized, forming the foundation for analyzing the forex market.

04:05

The proprietary forex indicators break down currency flows by individual currencies and pair them to identify the strongest and weakest currency pairs. This helps traders select pairs likely to show significant movement or monitor pre-selected pairs of interest, such as those involving the British pound. The indicators provide detailed insights into the behavior of currency pairs within a currency matrix. The segment concludes by referencing their quantum education program for further learning.

05:10

Quantum Trading Education and Funded Program

05:10

The speaker introduces a trading education program that includes various indicators and offers participation in a funded trading program where traders use allocated funds without risking their own money. They then discuss the importance of selecting suitable currency pairs for trading, highlighting the use of the US dollar index (Dixie index) as a tool for analysis, which is available through certain brokers like XM and integrated into their quantum trading tools.

06:29

Dollar Index and Market Sentiment

06:29

The speaker discusses the euro index and individual currency indices available through Quantum tools, focusing on the US dollar’s longer-term movements. Initially, the market narrative predicted a sell-off on the dollar, with significant short positions at the CFTC. However, these shorts have been overcome as the dollar has strengthened, particularly since the Georgia Senate runoff confirmed a fully Democratic administration. Historically, a Democratic administration correlates with a stronger dollar, a trend currently unfolding and surprising many short sellers who expected only a minor short squeeze.

08:03

Currency Strength and Pair Analysis

08:03

The speaker discusses current market activity, highlighting strong buying of the British pound and significant selling of the US dollar. They note a large upward candle from the previous day, suggesting a potential correction or reaction might follow. The key question is whether this correction will create a viable trading opportunity, emphasizing the importance of identifying where the dollar is being sold most strongly to find a worthwhile trade. The speaker introduces a matrix tool to analyze these movements, pointing out that the British pound (Cable) has experienced a notable move compared to other currencies.

09:09

The analysis continues with a comparison of currency moves, showing that the Euro and Canadian dollar have seen less activity, with Cable showing a value of plus 43 indicating a decent but not exceptional move. The speaker explains these values reflect the strength and quality of the moves rather than just size. Attention is also given to the Japanese yen, which has been sold off, providing insight into overall market sentiment. The speaker hints at a more detailed discussion on mixed sentiment across indices in future webinars.

10:17

Market Sentiment Divergence and Indices

10:17

The speaker explains that sentiment analysis used to be straightforward when major indices like the S&P 500 and Nasdaq moved together, indicating positive sentiment. However, currently there is significant divergence due to stock rotations, making the bond market increasingly important for assessing sentiment and predicting future trends.

10:49

There is a divergence in market movements with Dow futures slightly down while the Nasdaq is up, highlighting a shift in sentiment focus towards growth stocks. The strong performance of the Nasdaq suggests overall market optimism despite mixed signals from other indices.

11:24

Fundamental news flow has largely diminished except for the upcoming ADP report. Recent significant news includes UK GDP figures and developments in Asia. The speaker shifts attention back to charts, particularly focusing on the US dollar, while also noting that a colleague is analyzing yen currency pairs.

11:58

A custom profile named ‘the majors’ was created to better understand dollar flows across various currency pairs. The Commodity Strength Indicator (CSI) reveals uneven flows and indicates notable selling pressure on the US dollar, providing insights into current market dynamics.

12:41

Currency Flows and Session Impact

12:41

The speaker discusses how to identify the best trading opportunities among major currency pairs by analyzing their flow patterns. Using the example of the US Dollar/Swiss Franc pair, they note that parallel movement lines and a negative value in the matrix suggest it has not been a strong trade so far, though conditions could change later. They also emphasize the importance of considering the trading session and recent news releases, such as those affecting the British Pound. The speaker points out inconsistencies in the flow values across different dollar pairs, indicating that strong selling is not uniform, which is reflected in the varying matrix values.

14:20

Volume Point of Control and Congestion

14:20

The speaker discusses the USD/CAD currency pair, noting that it is currently trading around the volume point of control, indicating a congestion phase where price movement is limited. This phase is identified by the alignment of chart lines and the lack of strong directional moves. Such congestion phases occur across all time frames and suggest patience is needed before significant price action happens. The USD/CAD often remains subdued until the North American trading session begins, when increased activity is expected due to the opening of both New York and Canadian markets.

15:19

Attention shifts to the USD/JPY pair, which is influenced by broader market sentiment and can behave differently from other major pairs. Its movement is closely tied to the behavior of the yen itself and overall market mood. The discussion then returns to GBP/USD (Cable) at the London open, describing typical volatility and price action. The pair encountered resistance at the R3 level after an attempt to break higher, followed by a retest of the volume point of control, indicating a struggle to sustain momentum and suggesting a consolidation phase.

16:28

Price Action and Chart Patterns on Cable

16:28

The speaker discusses a trend higher for the currency pair ‘cable,’ noting a divergence pattern that indicates a likely half-decent move. This upward trend is coming to an end despite the prior strength seen after the market open.

17:00

Focusing on price action and candle patterns, the shooting star candle at the top of the move stands out. Although volume is only slightly above average—not as high as during the uptrend—this candle aligns with volume resistance, signaling a potential reversal.

17:33

The volume point of control, or fulcrum, marks key areas of support and resistance through volume bands. The price reached the outermost band of volume resistance and reversed, raising the question of whether this marks a true reversal despite the dollar index being in a daily uptrend.

18:04

The current price action contradicts the slower timeframe’s bullish sentiment. The shooting star candle combined with volume resistance suggests a strong bearish signal. Increasing volume on the downside hints at the beginning of a waterfall decline, based on analysis of the five-minute chart.

18:34

Volume Resistance and Trend Reversal Signals

18:34

The speaker analyzes various currency pairs using a five-minute chart, highlighting the euro dollar and other major pairs to identify strong movements. They explain that the Aussie dollar is currently moving sideways without a clear trend, indicating limited potential for significant moves despite some deviation from the volume point of control. The discussion emphasizes the importance of trend direction and volume analysis when assessing likely price movements.

19:36

Assessment of Other Currency Pairs

19:36

The speaker discusses a consolidation phase supported by volume and price-based indicators, noting that the Dollar/Swiss pair is not personally favored due to its limited trading opportunities. Instead, they prefer trading pound pairs such as Cable, illustrating how to analyze charts to identify where the dollar is being sold most strongly and to anticipate potential trades. The example focuses on using a five-chart profile approach to better understand market movements.

20:51

Multi-Timeframe Analysis with Renko Charts

20:51

The speaker discusses various chart types including daily, hourly, 15-minute, 5-minute, and Renko charts, highlighting the Renko chart’s usefulness for entry and exit points by holding onto price moves. They reference a previous webinar on using Renko charts on a 5-minute basis, available on YouTube. The speaker then invites questions about volume price analysis or indicators, encouraging participants to use the chat box, while addressing some audio issues during the session.

22:09

Euro Dollar Trend and Time Frame Selection22:09

The segment analyzes the eurodollar currency pair, highlighting a developing trend characterized by heavy selling of the euro and moderate selling of the US dollar. Using a 60-minute currency strength indicator, it shows strong euro weakness. Faster time frames (10 and 15 minutes) reveal intense euro selling but also indicate a beginning of dollar buying, suggesting a potential reversal. On slower time frames, the market appears more congested with less clear trend direction.

23:35

Intraday vs Longer Term Perspective

23:35

The speaker discusses the importance of selecting the appropriate time frame for trading. While longer time frames like 60 minutes or daily charts may show only minor corrections or insignificant price movements, shorter time frames such as 15 seconds to 5 minutes reveal more active and tradable trends. The choice of time frame depends on the trader’s strategy, whether scalping for quick trades or aiming for longer-term reversal setups. Observing trends on slower charts does not negate the presence of significant movements on faster time frames.

25:06

Currency Strength Overview and Trading Strategy

25:06

The discussion begins by analyzing the 60-minute time frame, noting that the pound is still climbing while the yen, having reached an oversold level, is starting to recover. The Swiss franc, dollar, and euro are selling off, whereas commodity currencies are beginning to rise. The speaker switches to viewing spot currency pairs on shorter time frames, such as 15 minutes, observing heavy selling pressure on the euro and dollar, with the dollar showing signs of an oversold bounce.

26:32

The speaker explains the inverse relationship between currency pairs like the euro-dollar and dollar-Swiss franc. Using a volume point of control (VPOC) indicator, they note that the euro-dollar pair is approaching a congestion area where price action might pause. However, this behavior does not necessarily translate directly to the dollar-Swiss franc. The dollar-Swiss has already formed a price channel around the VPOC due to prolonged price congestion, which creates strong support and resistance levels. This channeling helps traders identify key market levels for potential breakouts or setting stop losses.

28:03

Trading Congestion and Support Levels

28:03

The speaker discusses setting stop loss levels below significant volume and price-based support zones, emphasizing the importance of aligning stops with money management rules. They note that trading congestions requires patience, as the market must break away from these zones, which can be challenging and may not suit all traders.

28:31

Using the matrix tool provides an alternative inverse perspective on major currency pairs, such as USD/CAD, revealing dollar selling activity. This perspective helps traders analyze indicators, volume profiles, and price action more comprehensively, particularly around key levels like the volume point of control.

29:02

The example of a breakaway from a congestion zone is shown, highlighting trading around the volume point of control. The platform, NinjaTrader, offers real-time data visible in the user’s local time, illustrating activity from the London and European market opens, which adds context to price movements during these sessions.

29:30

The market exhibited congestion with clear resistance above and solid support below the volume point of control, tested multiple times. This creates a well-defined area to consider for trade entries. The speaker briefly pauses due to an interruption but continues to stress the value of such zones for analyzing accumulation phases.

30:06

As the market breaks away from congestion, traders look for entry points and levels indicating continuation of the trend, particularly on the downside. The speaker notes that this analysis is complementary to inverse charts where selling on one chart corresponds to buying on another, providing a broader market view.

30:34

The speaker introduces TradeStation Global, which integrates with Interactive Brokers, offering a deep discount brokerage with extensive trading capabilities. This platform complements the analysis by providing access to advanced trading tools and a wide range of instruments.

31:05

Futures Currency Matrix and Radar Screen

31:05

The speaker explains the setup of a futures matrix on the left side of their trading screen, showing various currency futures such as the Aussie dollar, cable, and CAD dollar. They note that futures are inversely related to spot markets because they are traded against the US dollar as the counter currency, except in a few cases. The matrix displays consistent directional movement across these currencies.

31:35

The discussion continues about the futures matrix, highlighting that the selling trend of the US dollar, previously indicated by blue color coding on the radar screen, has reversed. The speaker points out that the dollar is now showing signs of strong buying, evidenced by the shift from blue to red across the matrix. This indicates a ripple of dollar buying across the entire currency complex.

32:06

The speaker describes additional indicators on their trading screen, including the trim monitor with trend lines and bars, quantum trend dots, and a dynamic volatility indicator. These tools provide real-time updates and help visualize market trends and volatility, enhancing the decision-making process.

32:32

Focusing on the euro dollar (6E) futures on a 15-minute chart, the speaker demonstrates how the volatility indicator triggers alerts in real-time. They emphasize the usefulness of this feature on the radar screen, as it gives immediate heads-up signals about volatility changes, aiding traders to respond promptly to market movements.

33:03

Volatility Triggers and Real-Time Indicators

33:03

The speaker discusses evaluating whether a position is tradable and whether to exit or reduce it. They highlight the importance of monitoring the volume point of control, noting that the market is returning to this key area where congestion is likely to develop rather than a clear break through.

33:24

Using TradeStation, the speaker reviews major market indices to assess sentiment, which appears mixed and stagnant. They focus on the three US indices on Globex, noting that the YM index is largely flat as the London session progresses.

33:53

US Indices Sentiment and Market Patterns

33:53

The speaker reviews market trends using TradingView, noting that the FTSE 100 is mostly flat and slightly down. The Nasdaq shows more bullish activity with decent volume pushing prices higher, although it remains range-bound and forms a potential pennant or triangular pattern, indicating uncertainty. Meanwhile, the S&P 500, typically a benchmark index, is near all-time highs but seems to be losing its leading role to the Nasdaq. The speaker then examines currency strength across multiple timeframes, observing the pound beginning to sell off while the dollar strengthens, suggesting a possible reversal in currency trends.

35:21

Sentiment Shifts and Time Frame Considerations

35:21

The speaker discusses observing currency price movements, focusing on the euro’s recent bottoming out and buying activity on the one-minute timeframe. They explain the use of a currency matrix displaying multiple timeframes (1, 5, 10, and 15 minutes) to gauge sentiment. The matrix helps confirm whether sentiment towards a currency is consistent across timeframes, which is crucial for trading decisions.

36:18

The commentary continues on analyzing the euro’s sentiment across different pairs and timeframes. The speaker notes that while the one-minute timeframe shows buying interest, the five-minute matrix currently shows weakness. However, if the positive sentiment at the one-minute level persists, it should propagate upwards to the longer timeframes (5, 10, and 15 minutes), indicating a broader market shift.

37:11

The speaker concludes that the euro pairs are currently very oversold but that the emerging positive sentiment on the one-minute chart could trigger a broader rally if sustained. They emphasize the importance of volume price analysis (VPA) as a key method within their educational program to interpret market moves and potential reversals based on volume and price patterns.

37:43

Volume Price Analysis for Reversal Confirmation

37:43

The speaker discusses the challenge traders face in determining whether a current movement in the euro represents a true reversal in market sentiment or just a minor pullback. Many traders tend to close positions early when in profit due to emotional responses, which can lead to overall losses despite small gains. The importance of volume price analysis is emphasized, as it helps traders interpret whether the current price action indicates a significant trend reversal or a temporary pullback, which is crucial for deciding whether to hold positions in longer-term trades.

39:05

The speaker shifts focus to the 60-minute chart, noting no significant changes in the current market conditions. They introduce a new tool, the Volume Point of Control (V POC), and demonstrate its use on TradingView. This indicator is being developed to assist traders in better analyzing volume and price interactions to improve trading decisions.

39:41

Volume Point of Control on TradingView

39:41

The speaker introduces a volume point of control (VPOC) indicator currently in beta testing on TradingView, noting it functions without major bugs but the color scheme is still under consideration. The VPOC highlights areas of high and low volume, showing significant volume concentration and sharp volume drop-offs below certain price levels.

40:06

Examples of the VPOC indicator are shown on various currency pairs including the pound-yen, Aussie dollar, and dollar-CAD on five-minute charts. The volume patterns suggest potential price movements, such as price dropping back to the volume point of control and moving through low volume areas with relative ease. The speaker also references the Apple stock daily chart with its volume nodes and transitions between high and low volume zones.

41:06

The speaker demonstrates a heat map tool that can be used across multiple time frames and is customizable by the user. They highlight differences between this heat map and previous versions, emphasizing ongoing testing to ensure functionality and the absence of bugs.

41:33

Currency Matrix Metrics and Extremes

41:33

The speaker explains a unique table feature exclusive to TradingView, allowing users to customize it based on their trading style, whether scalping or longer-term trading. They introduce the currency array and currency matrix tools, which have been tested and are functioning well, noting that the matrix differs from an earlier version.

42:00

The currency matrix now includes all-time high, average, and all-time low values, adding a crucial metric that was previously missing. This helps traders understand whether a currency is at, approaching, or far from an extreme level, similar to how the CSI indicator uses thresholds to indicate overbought or oversold conditions.

42:31

The new metric provides a clearer context for currency positions by comparing current levels against all-time highs and lows. The speaker illustrates this with examples showing that some currencies are currently well below their extreme levels, giving traders better insight into market conditions.

42:59

The currency array complements the matrix by visually representing currency pairs approaching overbought or oversold levels, ranked accordingly. This provides a strong visual tool for assessing currency strength and market sentiment, aiding traders in making more informed decisions.

43:27

Renko Chart Developments and Application

43:27

The speaker discusses the Renko chart, mentioning that there will be two versions of it soon, though details will be shared next week as it is still in development. A preview image will be available in the VPA chat room. The focus is currently on the Eurodollar, where price action shows a slight upward move but with congestion expected near the volume point of control level, applicable across different timeframes.

44:23

The discussion shifts to the profile for Cable, highlighting its potential reversal as indicated by a shooting star candle on the five-minute chart. This observation is tied to earlier analysis of the major currency profiles, suggesting caution in interpreting recent price movements.

45:03

Price Action Candles and Volume Analysis

45:03

The speaker explains the significance of the hammer candle in price action trading, describing it as a strong reversal signal. The candle forms when buying pushes the price up but then collapses back down, indicating weakness. The strength of this signal is enhanced when considering the volume associated with the candle, which appears slightly above average. The discussion highlights that this trading activity occurs during the London session, where volume typically increases due to higher participation.

46:10

The analysis continues by noting that the volume during the London session is higher than during the Asian session, which sometimes seems lower by comparison. The next candle after the hammer is a small upward candle with even less volume, confirming the initial observations. The speaker emphasizes that despite the reversal indicated, the volume is not as strong as might be expected for such a deep liquidity session, which causes the price movement to be slower than anticipated.

47:15

The speaker notes that the price has reversed, but the lack of strong volume means the decline is not as sharp as it could be. They suggest that to fully understand the signal, one should examine slower time frames for better context. The discussion concludes with the intention to review the hourly chart with other indicators to gain a clearer picture of the market situation.

47:48

Volatility Candles and Session Impact

47:48

The segment explains the concept of a volatility candle, identified by a purple arrow indicating a price move outside the average true range for the timeframe. This often signals a price reversal back within the candle’s range. The speaker advises that when observing faster timeframes like hourly charts, such volatility triggers can indicate potential reversals.

48:22

The discussion continues with the importance of the volume point of control (VPOC) on the hourly chart, which suggests potential congestion or indecision in the market. The VPOC helps traders anticipate pauses or pullbacks as the market evaluates its next directional move, particularly relevant when approaching new trading sessions.

48:59

The speaker highlights the significance of timing relative to trading sessions, noting that the current time is approaching the New York forex session and Wall Street open. These session changes can influence market direction and volatility, so traders should factor session timings into their analysis.

49:32

Attention shifts to a non-time-based Renko chart to analyze price action, identifying a potential reversal pattern resembling a ‘V’ shape without significant sideways congestion. The lack of congestion indicates the move has not fully developed, partly due to insufficient volume to trigger a stronger reaction.

50:03

The segment concludes by noting that, although the current pullback is small, it could still continue higher. The speaker remarks that volatility in many markets, including forex, has generally decreased, causing price moves to develop more slowly. They reference matrix values on hourly charts, where certain numerical thresholds can signal stronger moves or trend changes.

50:42

Market Volatility and Trade Development Speed

50:42

The speaker discusses the slow development of market moves on a five-minute chart due to low volatility and momentum, which can take hours to form. They highlight the usefulness of Renko charts for entries, holding positions, and re-entries with exits. Additionally, they recommend combining observations from time-based charts, candle patterns, support and resistance levels to identify and manage trading opportunities effectively.

51:58

The discussion shifts to the importance of volatility and momentum in market analysis. Momentum can be measured using tick charts available on platforms like NinjaTrader and TradeStation. High activity results in multiple volatility candles, but typically the second candle reverts to the spread unless strong momentum drives it further. The speaker notes that volatility candles on slower time frames, such as hourly charts, hold significant weight and should be closely monitored, as confirmed by traders in their program.

54:03

Euro Dollar Rally and Multi-Time Frame Strength

54:03

The speaker introduces a market update focusing on the Euro Dollar using NinjaTrader. They observe a rally beginning on the Euro Dollar and discuss how this movement is reflected in the currency matrix and short-term time frames like the one-minute and five-minute charts.

54:46

The analysis continues with the observation that price action on the one-minute chart is volatile and may change frequently, which is typical for fast time-frame trading. The trend seen on the one-minute chart has now transitioned to the five-minute chart, indicating developing market strength.

55:06

The trend is expected to extend further to the 10-minute and 15-minute charts if the strength continues. The speaker emphasizes the classical approach of using multiple indicators and time frames together to assess market sentiment, determine whether a trend is primary or a pullback, and anticipate future price movements.

55:34

The speaker directs viewers to find all relevant trading indicators on quantumtrading.com, compatible with platforms like NinjaTrader (versions 7 and 8), TradingView, and TradeStation (both 9.5 and 10). They mention that purchasing the full package grants access to these tools and feeds.

56:05

Quantum Trading Program and Future Indicators

56:05

The speaker explains that all future trading indicators developed will be offered free of charge, but customers can purchase individual indicators or upgrades. Any purchase grants a credit towards future purchases, ensuring customers never lose out. Additionally, there is an educational forex trading program with an integrated funded trading option. This funded program allows students to trade using the company’s capital, offering a risk-free opportunity to apply their knowledge and earn profits.

56:57

Funded Trading Program Details and Benefits

56:57

The evaluation accounts start with three levels: 5,000, 10,000, or 15,000. Upon achieving realistic profit targets, the account size is multiplied by four, for example, 15,000 increases to 60,000. After this, the account size doubles incrementally. Traders earn 35% of the starting level evaluation profit as a lump sum kickback. Advancing to the portfolio manager levels increases the profit share to 50%, paid monthly. The evaluation stage focuses on spot currencies with 28 pairs available.

57:59

At the portfolio manager level, the range of tradable markets expands to include indices like the S&P 100, currency pairs such as USD/JPY, the German DAX index, and gold. This broader market access was added in response to customer requests. The program includes risk and money management rules to maintain discipline, making it a comprehensive and attractive trading opportunity.

58:28

Comprehensive Education Program Overview

58:28

The education program is a comprehensive forex trading course with approximately 451 lessons totaling between 250 and 300 hours of video content. It covers modules such as trading psychology, fundamentals, relational analysis, volume price analysis (VPA), and trading mechanics. Additionally, students can join the daily VPA traders chat room hosted by the instructors for support and discussions. Resources including analysis and books by Anna are also available on the associated website and Amazon in both Kindle and paperback formats.

59:25

Closing Remarks and Next Sessions

59:25

The session concludes with a reminder of upcoming meetings at 2:15 and 3:00. The speaker thanks Steve for his participation and wishes everyone an enjoyable remainder of the trading day before signing off.

 

By Anna Coulling – creator of volume price analysis