Trading multiple time frames in forex

Trading multiple time frames in forex.

00:02

Webinar introduction and disclaimer

00:02

The webinar begins with a warm welcome and an expression of surprise that the technology is working smoothly. The host emphasizes the importance of risk awareness in trading, especially in the forex market, urging participants not to use money they cannot afford to lose. The discussion touches on the challenges new traders face across all markets, noting that suffering and losses are common for beginners regardless of the trading environment.

01:05

Success with volume price analysis methodology

01:05

The speaker discusses traders who have successfully adopted their volume price analysis methodology, sharing positive feedback from users including one from India trading the Nifty and Indian stocks. The trader’s success on day charts and questions about trading off a shooting star pattern highlight practical application. The segment concludes with an introduction to applying this methodology specifically to the forex market, setting the stage for further exploration.

02:09

Forex market context and fundamentals

02:09

The speaker explains that trading in the forex market requires understanding the broader context beyond just charts and indicators. Fundamental news and related markets influence price movements, making forex unique. The market can sometimes lead trends that appear later in other sessions. The VPA methodology, which incorporates fundamentals and related markets, is detailed in books available on Amazon. The speaker and David recognized early on that forex operates differently from other markets.

03:17

Currency dashboard and indicators overview

03:17

The speaker explains the complexity of trading currency pairs, emphasizing the importance of distinguishing which currency in the pair is influencing movement — whether the US dollar is strengthening or the Canadian dollar is weakening, for example. To address this, they developed specific indicators known as the currency dashboard, which can also be purchased separately. The best way to understand these indicators is by viewing them on charts. The speaker mentions using MT5 for its wider range of time frames, although MT4 remains more popular. They also reference having NinjaTrader available but plan to focus on MT4 time frames for this session.

04:21

The speaker continues by describing their setup, which includes multiple time frames and three indicators from the currency dashboard. They adjust the display to better showcase the indicators, specifically highlighting the hourly time frame. The choice of MT4 time frames is due to its broader user base despite the availability of MT5.

04:54

Session crossovers and currency flow shifts

04:54

The speaker explains the use of a benchmark chart and an indicator called the matrix to analyze currency movements. They focus on isolating individual currencies to determine if the market is broadly buying or selling them. Using the British pound on a 15-minute chart as an example, they note significant moves occurring around the London open, highlighting the volatility and common traps traders face during session crossovers. The speaker emphasizes the importance of understanding the shifts in market flows tied to different global trading sessions, pointing out that although forex operates 24 hours, it effectively consists of three distinct markets with unique participants, news, and sentiment that can influence price movements.

06:34

Wall Street is identified as the leading market influencing subsequent sessions in Asia and Europe. Market reactions in Wall Street often carry over to other financial centers, though by the time London and Europe open, the initial impact may be diluted, resulting in different market conditions. The speaker references charts from investing.com to support this insight, affirming their familiarity with these market dynamics.

07:07

Market sentiment and related markets update

07:07

The speaker discusses a recent oil post featured on investing.com, highlighting valuable volume price analysis (VPA) lessons related to support and resistance in oil prices. The focus then shifts to current market sentiment, noting that despite the Dow Jones dropping nearly a thousand points the previous day, some recovery occurred with a 650-point decline by the close. The market mood is influenced by rising coronavirus cases, which are causing caution about the speed of economic recovery.

08:15

The increasing number of COVID-19 cases is unsettling the market due to concerns about slower economic recovery, despite lower death rates compared to earlier in the year. Market sentiment was more optimistic in the morning, with indices like the Nasdaq rising slightly. However, certain currencies such as the Australian dollar, New Zealand dollar, and Japanese yen did not show strong reactions, indicating uncertainty. The Australian yen currency pair is mentioned as a proxy indicator for upcoming market trends.

10:00

Currency pairs as risk proxies

10:00

The discussion begins with an overview of the New Zealand dollar and other ‘yen crosses’ as proxies for market risk. The speaker uses NinjaTrader for accurate market timing and reviews the morning price movements in indices, noting a period of low volatility in the CAD/JPY pair during the early session. Despite anticipation of stimulus deals and upcoming earnings, the market showed little directional movement before gradually drifting lower.

11:04

Attention is drawn to an anomalous large candle during European trading hours, which did not correspond with a significant increase in volume, highlighting the nuances of forex liquidity across sessions. The speaker emphasizes how currency focus and liquidity shift depending on the trading session and points out a brief attempt at upward movement that did not sustain, returning to a key volume point of control.

12:19

The analysis shifts to the US session, noting the dual nature of its opening: the forex open around 1:30 London time and the cash market opening at 2:30. This period saw a sharp waterfall decline in indices, with the Dow nearly losing 1,000 points. Currency movements remained generally consolidated on the hourly chart, though faster time frames showed more activity, including a noticeable sell-off in the Pound and buying strength in the US Dollar and Canadian Dollar.

14:06

The speaker discusses an upgraded indicator that now provides references for extreme values, helping to gauge whether current movements are above or below average. This tool revealed that recent moves in the Pound/Canadian Dollar, though notable, were not substantial on the hourly timeframe. The segment ends with the speaker preparing to analyze the Pound/Canadian Dollar pair more closely, considering different time frames and pairs.

15:18

Pound Canadian analysis and trading lessons

15:18

The speaker analyzes the British pound’s price action on various timeframes, focusing on a reversal at the market open. Using Volume Price Analysis (VPA), they identify a significant down move followed by a low-volume retracement, which signals a likely continuation lower rather than a reversal. The discussion highlights the importance of understanding price action patterns like volatility candles and doji candles within the context of trading sessions to avoid being caught out by sudden shifts in market sentiment.

16:55

The segment explains how trading session crossovers can lead to misleading price movements, causing traders to misjudge trends. A Renko chart is introduced to provide a clearer, less noisy visualization of the price action seen on time charts. The Renko chart confirms the earlier analysis showing a break lower, a brief pullback with little follow-through, and persistent bearish momentum indicated by red trend indicators. This supports the VPA conclusion that the retracement lacks volume and the downtrend is likely to continue.

18:43

As the London session approaches, the speaker discusses the uncertainty of whether the price action represents a reversal or a sideways drift continuing the primary downtrend. They advise traders who are not already in a position to wait for clearer signals, while those in profit should consider scaling back their positions to manage risk, given the possibility of either continuation or reversal at the session open.

19:51

The discussion shifts to the broader market context using a matrix of currency strength and volume indicators. The speaker notes that the British pound’s price action on the hourly and daily charts is narrow, reflecting low volatility. These indicators provide insight into how strongly currencies are being bought or sold, helping traders identify opportunities. For example, the pound Canadian pair shows the strongest move among pound pairs, suggesting it may offer better trading opportunities compared to others like cable.

21:37

The speaker explains that as selling pressure on the pound against the Canadian dollar reaches a pause due to support or resistance, traders might see rotation into other pairs like cable if selling continues. The overall low indicator values suggest limited movement in the current session. The segment concludes with a handover to a colleague, David, who will provide further analysis, noting that currency overbought or oversold conditions can persist for extended periods.

By Anna Coulling – creator of volume price analysis