Trading reversals using the currency matrix and the currency array for NinjaTrader
The forex market is one of mean reversion which means is almost a pure market of reversals as currencies and currency pairs move from oversold and overbought constantly in all timeframes. In this video from the London forex trading session, we show you how to use the currency array and currency matrix indicators for NinjaTrader.
00:22
Overview of majors and dollar Swiss dynamics
00:22
The speaker confirms technical readiness with participants and returns to discussing the majors in currency trading. They highlight recent developments in the dollar-Swiss franc pair, noting interesting changes since their last review.
00:49
Price waterfall and volume analysis
00:49
The speaker explains a classic price waterfall scenario where strong buying in the Swiss franc is balanced by strong selling in the U.S. dollar. This dynamic leads to rising volume, widening spreads, and falling price action, illustrating the ideal characteristics of a price waterfall pattern.
01:15
Dollar selling strength and pair direction
01:15
This segment explains the dynamics between the US dollar and the Canadian dollar, highlighting how the US dollar’s selling strength can drive the currency pair lower even though both currencies move in the same direction. It advises caution in interpreting trends, as the apparent strength in one pair may not reflect the strongest trend within the broader currency matrix.
01:42
Currency divergences and volatility triggers
01:42
The discussion focuses on identifying divergence strength or weakness between currency pairs, highlighting current strong movements such as the Australian dollar rising strongly against the New Zealand dollar, the pound strengthening, and declines in the US and Canadian dollars. Additionally, the volatility index (VIX) showed a strong rally yesterday but is now declining, indicating shifts in global market sentiment. Notably, volatility triggers are present across multiple major currency pairs, signaling significant market activity and potential trading opportunities.
02:31
Volatility signals across currency matrix
02:31
The speaker explains how observing patterns across multiple related currency pairs, such as the Eurodollar and five others, can indicate likely price reversals or market congestion. They highlight the significance of a large volume injection, signaling active participation from major market operators and market makers. This is further confirmed by a tick speedometer showing full spectrum color, which collectively provides strong clues about upcoming market movements. The segment concludes with the speaker preparing to demonstrate multiple currency strength indicators on various timeframes.
03:31
Currency strength indicators and trade setup
03:31
The speaker explains that despite rapid market changes, the core trading principles remain consistent. They highlight heavy selling of the dollar and overbought conditions in the euro, with other currencies climbing. Successful trading involves balancing chart analysis with indicators like the CSI, which acts as a powerful market radar to identify promising trades. Traders should continuously cross-reference the CSI with chart movements to time entries and exits effectively. Observing currency movements across time frames helps identify developing trends or reversals, such as rising Aussie and New Zealand dollars against falling Canadian dollars and euros. Trend trading allows for tighter stop losses, while reversals require a different approach.
04:46
Trading trends versus reversals strategies
04:46
The speaker explains how to identify reversals from overbought and oversold conditions, emphasizing the need for a wider stop loss when trading such reversals. They analyze a currency array across multiple time frames (3, 5, 10, and 15), showing strong selling pressure on the US dollar. This is visually confirmed as many currency pairs involving the dollar are either at the top or bottom of the array, reflecting a widespread trend of dollar selling.
05:39
The discussion continues with specific examples such as the British pound (cable), Australian dollar, and euro-dollar pairs showing trends consistent with dollar weakness. The speaker highlights visual signals indicating when currency pairs approach overbought or oversold conditions, explaining that these signals are alerts to examine charts and indicators further rather than immediate trade signals.
06:34
The speaker describes how these overbought and oversold principles apply across different time frames, from minutes to daily charts. They introduce the currency matrix tool, which provides a consolidated view of currency strength and weakness, reinforcing the same strong dollar selling picture across multiple time frames.
07:02
A new indicator developed for TradeStation, soon to be available on other platforms, is introduced. This indicator quantifies whether currency measurements are at extremes or averages by printing levels such as highs, medians, or averages of recent bars, similar to an 80/20 metric. This helps traders gauge how overbought or oversold a currency pair is, aiding in the assessment of potential reversal setups.
08:02
Further explanation is given on how to interpret the indicator’s levels to understand if a currency reading is high, average, or ultra-high. The speaker isolates the US dollar, confirming the current strong selling trend. They emphasize that trading reversals requires a constant process of analysis and wider stop losses to accommodate market buffering, congestion, and pullbacks.
08:56
The final part discusses trading approaches: entering early on trend reversals with wider stop losses to allow for volatility, versus trading established trends with tighter stops. The speaker suggests reviewing the currency multiples and matrix tools to measure these phases accurately, highlighting the importance of adjusting stop loss sizes depending on the trade style and market conditions.
09:24
Stop loss placement and breakaway trading
09:24
The speaker explains how to approach trading during congestion phases, emphasizing that stop-loss placement depends on risk tolerance and key price levels. They describe trading out of congestion with a focus on downside moves, highlighting signs of weakness like high volume and weak candles. Volatility often leads into congestion, which is expected. Breakaway trading is praised for clearly defining stop-loss levels and providing strong protection barriers through price action.
10:17
Forex education program and resources
10:17
The speaker highlights the comprehensive forex trading education program available on quantumtradingeducation.com, which covers essential topics such as fundamentals, psychology, and advanced technical analysis including volume price analysis (VPA). The program includes over 200 hours of video content, indicators for multiple platforms, and access to a private traders group hosted by the instructors for ongoing support. Additionally, the speaker mentions the integration of Tradestation with Interactive Brokers, offering a powerful and cost-effective trading setup. Resources and analysis by Anna are available on her site, anacooling.com, along with her books on Amazon.
12:02
Upcoming sessions and FOMC risk advice
12:02
The speaker wraps up the session, apologizing for the quick pace and announcing the next meeting times: Thursday afternoon at 5:15 US time and the following week on Tuesday as usual. They thank the audience for attending, express hope that the information was useful, and remind viewers to be cautious trading major currencies due to the upcoming FOMC event later tonight. The session ends with well wishes for the rest of the trading day and a farewell.
By Anna Coulling – creator of volume price analysis
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