Using the currency strength indicator to reveal sentiment on MT5 indices

Using the currency strength indicator to reveal sentiment on MT5 indices

You don’t have to have a futures account to trade US indices – they are all available on MT5 which is a multi asset platform. And in this part of the US futures trading session Anna explains how to use the currency strength indicator in combination with the index to reveal market sentiment using the proxy currency pair.

00:11

Introduction to Ninja Trader platform and market access issues

00:11

The speaker discusses an issue accessing their trading platform with Ninja Trader, explaining that the GGW wouldn’t allow access. They mention efforts to set up different platforms, including Ninja Trader and TradeStation, within a short time. However, they clarify that trading these particular markets through Forex brokers on MT4 and MT5 platforms is not possible.

00:48

Synthetic market versions and US 100 Nasdaq equivalence

00:48

The platform offers a synthetic version of either the cash market or the futures market, specifically the U.S. 100, which corresponds to the Nasdaq. The values shown correspond to the cash market rather than the futures market, though both tend to move in the same direction. A key advantage of using this platform is the availability of specialist forex indicators.

01:24

Using Aussie and Yen as risk sentiment indicators

01:24

The speaker explains how the Australian dollar (Aussie) and Japanese yen currencies can indicate market movements. When the Aussie rises and the yen falls, it suggests that market indices are also moving up. The Aussie is viewed as a proxy for risk sentiment, so if it is being bought, it reflects positive market sentiment and overall investor optimism.

02:04

Market congestion between support levels S1 and S2

02:04

The market is currently in a congestion phase, positioned between two significant levels labeled S1 and S2. This phase indicates uncertainty as the market decides whether to continue moving higher or to reverse downward. The analysis is based on observations from the Meta MT5 version of the camera, showing lines moving in the same direction that highlight this congestion.

02:44

Choppiness in market trends and use of Renko charts

02:44

The segment discusses analyzing charts on faster timeframes, highlighting a fall back into congestion with some down candle activity. It notes the presence of choppiness in the trend, evidenced by fluctuating colors on the trend monitor, indicating an unsmooth market movement. The speaker suggests using a raincoat chart as a method to better handle this market volatility.

03:18

Benefits of Renko charts for smoothing volatility

03:18

David explains the Renko chart combined with the time chart, highlighting its advantage as a purely price-based chart that smooths out volatility. Unlike traditional candlesticks, Renko charts reduce noise and assist with identifying clearer entry and exit points. The indicator, designed for NinjaTrader and MT4/5 platforms, features small blue dots closely tracking the market, along with a trend monitor to support trading decisions.

03:54

Trend monitor signals and entry point identification

03:54

The speaker explains a rule of thumb for trading entries, which involves aligning colors where bright colors indicate potential entry points. They emphasize the importance of also checking time charts to avoid entering trades during major news events. Additionally, they mention the use of support and resistance indicators on the platform, noting that thicker lines often represent significant levels.

04:26

Support and resistance indicators and price action analysis

04:26

The speaker discusses the strength of the hatch lines compared to the Ninja indicator, noting that camera placement is possible on the Ninja one but not on the hatch. They analyze the price action on the NQ, describing a pattern of moving lower and then higher, resulting in a congested and choppy price movement. The speaker explains that the price did not enter a bright red zone, which typically signifies a transition between primary trends (primary to primary), a phase often associated with congestion.

05:03

Market congestion phases and indecision signals

05:03

The speaker describes a fluctuating pattern where the indicator moved higher but didn’t reach a bright red zone, showing some intermittent red spots and an in-between color before returning to blue. It then shifted back into a dark red, indicating indecision but a potential for further upward movement. The speaker notes some confusion and observes that futures are currently slightly down on investing.com.

05:36

Current futures and stock market conditions overview

05:36

The speaker discusses the current market conditions, noting that the Dow is positive and the VIX index has not changed on their investing platform, despite being visible on another charting tool. They observe a sideways, congested pattern in the market, describing it as a pause or consolidation phase, with confirmation from Renko charts showing similar behavior.

06:09

Renko charts detecting momentum and reversal timing

06:09

The speaker discusses how momentum affects the speed of market movements, noting that fast-moving trends will shift quickly while pauses indicate uncertainty. They emphasize the importance of confirming these moves using time charts and volatility candles. Additionally, they mention that using specific chart tools, like the ‘raincoat chart,’ can assist traders in deciding when to exit trades or anticipate reversals across different trading platforms.

06:44

Combining charts and related markets for trade decisions

06:44

The speaker explains that while certain analysis methods remove noise from time-based charts, it is important to use multiple approaches together. They highlight a teaching from their program that involves analyzing related markets simultaneously. For example, observing the yen weakening and the Australian dollar strengthening can indicate a move driven by risk appetite, suggesting a potential upward trend in the market.

07:23

Summary and transition to further discussion

07:23

The speaker mentions a pullback and suggests passing back to another person to review the remaining content.

By Anna Coulling – creator of volume price analysis