Using the renko indicator for trading forex

Using the renko indicator for trading forex

The Renko indicator is a wonderful indicator to use in combination with time-based charts, and in the webinar we show on the GBP/JPY pair.

00:12

Forex factory numbers and central banks

00:12

The speaker comments on recent forex factory data, noting that the reported numbers are almost meaningless in the current context. They emphasize that the key focus should now be on central bank actions, as market conditions have deteriorated significantly. The speaker also mentions that the upcoming reports at the end of next month will be more important and expresses hope that the current low point is the worst of the situation.

00:49

Unprecedented speed of market fall

00:49

The speaker discusses the unprecedented speed of the recent market fall, emphasizing that while the scale of decline is not unprecedented, the rapidity is. They recall the downturns in 2000, 2007, and 2008, which unfolded gradually over months, contrasting with the current situation where significant declines have occurred within weeks. The speaker also mentions monitoring currency trends, specifically the pound-yen exchange, noting activity prior to the London market opening.

01:29

Price consolidation and support resistance

01:29

The segment discusses a period of consolidation observed on the 12-minute chart, indicating a potential continuation of an upward move. It explains the strategy of capturing price movements, either as reversals or through identifying points where the price has previously reversed, using concepts of support and resistance based on price levels.

02:05

Volume point of control indicator explained

02:05

The speaker explains the concept of resistance based on volume, specifically referencing a volume point of control indicator. They describe shadowing behind price action on an hourly chart, which highlights areas of supply and demand, support, and resistance. These areas indicate where price has previously halted and are likely points for potential price reversals, important for traders to recognize.

02:37

Reversal trading and Fibonacci approach

02:37

The speaker discusses the strategy of Fibonacci traders who mark charts geometrically and wait for prices to reach specific points based on past reversals. This approach involves reversal trading, which carries its own level of risk and differs from other trading methods.

03:05

Congestion zones and trend breakout

03:05

The speaker explains the importance of entering early in trading because price movements rarely follow a straight line. Using an hourly chart, they highlight a zone called the ‘point of control,’ where significant price agreement and volume congestion occur. Despite efforts to move away from this area, prices tend to return to this volume point, indicating its significance. The longer the price remains in this zone, the more important it becomes for potential breakaway movements.

03:35

Wyckoff law and pullbacks in trends

03:35

The speaker explains that price movements, whether upward or downward, tend to correlate with the duration spent in a particular phase of price action. This concept is tied to the Wyckoff second law of cause and effect. Price trends are rarely linear and often include pullbacks or periods of congestion on slower time frames before continuing their general direction.

04:09

Market creep and equilibrium return

04:09

The speaker discusses market movements, emphasizing that prices tend to ‘creep’ higher gradually when supported by good volume. They note that recent extraordinary price ranges are unlikely to return in the next few days, as the market needs time to stabilize and find equilibrium. The speaker also mentions using a Renko chart to analyze this behavior.

04:50

Renko chart for trend and volatility

04:50

The speaker explains how the chart smooths out spikes in price action, illustrating the phases of a primary uptrend with minor reversals and consolidation. They highlight the significance of a support line around 128.12, which coincides with the volume point of control on the three-minute chart, and note the timing of the London market opening.

05:30

Renko indicator and momentum signals

05:30

The speaker explains that they anticipated a market reversal but decided to close their position as the London session ended. They observe that the market now appears to be resuming its primary trend. The Renko indicator used on the M25 timeframe captures momentum and volatility, with candles that expand and contract before settling back into a brick-like pattern.

06:01

Trading reversal and secondary trends

06:01

The speaker explains that as a trader, you typically avoid trading reversals directly. Instead, you look for points on the chart where the price enters a congestion or pause phase, indicating a potential breakout. This breakout can either resume the primary trend, result in a reversal from the congestion, or establish a tradable secondary trend. The key is to recognize these patterns and decide which trading approach suits you best.

06:36

Trader preferences and risk levels

06:36

The speaker discusses David’s trading style, emphasizing his comfort with large, ranging reversals. David prefers entering trades early in a move, accepting the risks of potential pullbacks. The speaker also mentions the importance of analyzing the chart structure to inform trading decisions.

07:11

Multiple time frames in volatile markets

07:11

The speaker discusses their approach to price action trading, emphasizing the importance of recognizing congestion phases and using multiple time frames for decision-making. They highlight that while slower time frames like daily, weekly, and monthly charts are valuable, current market moves have been extremely volatile, influencing how these time frames are applied.

07:43

Renko chart settings and quantum indicators

07:43

The discussion focuses on preferring faster time frames for trading analysis. David agrees and explains the use of the Renko chart, highlighting its simplicity and how trend dots and a trend monitor work together to identify potential trades. He mentions using the fixed value option in the Renko chart setup.

08:16

Momentum and congestion with CSI indicator

08:16

The speaker discusses adjustments made to trading indicators, moving away from an ATR-based setting due to a prolonged period of market congestion and lack of price movement. They prefer a setting that responds more quickly to price action on the Renko chart. The quantum indicators, including the 15-minute ATR and CSI momentum indicators, are being used to analyze currency pairs, specifically noting that the pound-yen pair is not showing strong movement, unlike the Australian and New Zealand yen pairs which have moved more significantly due to market sentiment.

09:23

Currency divergence and market sentiment

09:23

The speaker explains how the CSI indicator helps identify potential reversals and individual currency behavior. It also signals congestion when currency lines move closely together, as seen with the Swiss franc, British pound, and Japanese yen. Congestion indicates limited movement, which was confirmed by the chart analysis. The speaker notes that although the moves appeared labored without strong divergence initially, the price is now pushing higher. A daily chart review shows an overall upward trend for both the British pound and related currencies, despite some system irregularities.

10:25

Price resistance and support levels

10:25

The speaker discusses price resistance levels, specifically around 129 and 2936, indicating strong resistance in the price movement. They explain that the indicator used, designed for MetaTrader 5, shows solid lines to represent significant price resistance points.

11:07

Managing fundamental and technical data

11:07

The speaker explains that resistance levels are stronger when combined with various indicators like support, resistance, blinders, demand zones, and volume-based measures, which provide price objectives for current trading. They note that the recent price action appears slow compared to the past few weeks but is actually more typical and less stressful for traders. Using a 3-minute chart, the speaker describes the price moving off a congestion platform and emphasizes the importance of managing information from fundamental, market, and political perspectives alongside chart analysis, suggesting that with experience, the overall picture will become clearer.

12:23

Trading analogies: pilot and car driving

12:23

The speaker compares pilot training to learning to drive a car, emphasizing the progression from flying small prop planes with basic instruments to more complex aircraft like the 747. They highlight the importance of understanding and recognizing different conditions, similar to how a driver learns to judge weather and road safety, stressing the need to interpret charts and environmental cues effectively for safe flying.

13:20

Watching momentum and volume shifts

13:20

The discussion focuses on market movements, particularly regarding the yen and the pound. The speaker notes possible divergence and momentum shifts, suggesting the yen might turn up but the stronger pound could push prices higher. They emphasize monitoring levels, volume, and adapting strategies accordingly. The segment ends with a brief sign-off and an invitation to join the next session covering the American market and futures.

14:27

Quantum trading education and support

14:27

This segment provides information about the Quantum Trading education program and how to access the indicators. It mentions contact details for support through Anna, David, and Jonathan, ensuring viewers can get their questions answered. The speaker wishes the audience a great trading day and mentions the next session will be on Thursday.

15:00

Program wrap-up and next session info

15:00

The speaker greets the audience on a Thursday morning, expressing pleasure in their return and wishing them a lovely day.

By Anna Coulling – creator of volume price analysis